Federal Register, Volume 70 Issue 63 (Monday, April 4, 2005)

[Federal Register Volume 70, Number 63 (Monday, April 4, 2005)]
[Rules and Regulations]
[Pages 17168-17192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-6599]

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Part III

Department of Health and Human Services

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Food and Drug Administration

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21 CFR Part 2

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

Federal Register / Vol. 70, No. 63 / Monday, April 4, 2005 / Rules
and Regulations

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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: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is amending 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 have been marketed for more
than 3 years. FDA has determined that the two non-ODS MDIs will be
satisfactory alternatives to albuterol MDIs containing ODSs and is
removing the essential-use designation for albuterol MDIs as of
December 31, 2008. Albuterol MDIs containing an ODS cannot be marketed
after this date.

DATES: This rule is effective December 31, 2008.

ADDRESSES: Received comments, a transcript of, and material submitted
for, the Pulmonary-Allergy Advisory Committee meeting held on June 10,
2004, the environmental assessment, and the finding of no significant
impact may be seen in the Division of Dockets Management, 5630 Fishers
Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday
through Friday.

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. Introduction and Highlights of the Rule
II. Background
A. Albuterol
B. CFCs
C. Regulation of ODSs
1. The 1978 Rules
2. The Montreal Protocol
3. The 1990 Amendments to the Clean Air Act
4. EPA's Implementing Regulations
5. FDA's 2002 Regulation
III. Comments on the 2004 Proposed Rule
A. General Comments
B. 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 with the Same Route of Administration,
for the Same Indication
2. Approximately the Same Level of Convenience of Use
C. Supplies and Production Capacity for the Non-ODS Products Will
Exist at Levels Sufficient to Meet Patient Need
D. Adequate U.S. Postmarketing Use Data is Available for the Non-
ODS Products
E. Patients Are Adequately Served by the Non-ODS Products
F. Effective Date
G. CFCs and the Environment
H. Comments on the Analysis of Impacts
I. Other Comments
IV. Environmental Impact
V. Analysis of Impacts
A. Introduction
B. Need for Regulation and the Objective of this Rule
C. Background
1. CFCs and Stratospheric Ozone
2. The Montreal Protocol
3. Benefits of the Montreal Protocol
4. Characteristics of COPD
5. Characteristics of Asthma
6. Current U.S. Albuterol MDI Market
D. Benefits and Costs of the Final Rule
1. Baseline Conditions
2. Benefits of the Final Rule
3. Costs of the Final Rule
4. Effects on Medicare and Medicaid
E. Alternative Phaseout Dates
F. Sensitivity Analyses
G. Small Business Impact
1. Affected Sector and Nature of Impacts
2. Outreach
H. Conclusion
VI. The Paperwork Reduction Act of 1995
VII. Federalism
VIII. References

I. Introduction and Highlights of the Rule

We published a proposed rule in the Federal Register of June 16,
2004 (69 FR 33602) (the 2004 proposed rule), proposing to remove the
essential-use designation for albuterol MDIs. Albuterol MDIs containing
chlorofluorocarbons (CFCs) or other ODSs cannot be marketed without an
essential-use designation. We have determined that the following four
criteria for removing an essential use have been met or will be met by
the effective date of the final rule:
More than 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 products
will exist at levels sufficient to meet patient need;
Adequate U.S. postmarketing use data is available for the
non-ODS products; and
Patients who medically required the ODS product will be
adequately served by the non-ODS products containing that active moiety
and other available products.
We have also determined that the appropriate effective date for the
removal of the essential-use designation for albuterol MDIs is December
31, 2008.
We will discuss our determinations on the criteria and the
effective date in section V of this document ``Comments on the 2004
Proposed Rule.''

II. Background

A. 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

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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 aerosolized drug
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 MDIs were approved by FDA. The
first generic albuterol MDI was approved in 1995. Albuterol MDIs have
historically used the 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 could
affect the availability of these important drugs.

B. 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.

C. 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 importation of
ODSs, including CFCs.
1. 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 II.C.5 of this document.
2. The Montreal Protocol
On January 1, 1989, the United States became a party to the
Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal
Protocol) (September 16, 1987, 26 I.L.M. 1541 (1987)), available at
http://www.unep.org/ozone/pdfs/Montreal-Protocol2000.pdf.\1\ The United
States 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 188 parties to this
treaty.\2\ 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 used
this adjustment procedure to 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
by Parties that are developed countries by January 1, 1996 (Decision
IV/2).\3\ 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,

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although, to date, all such decisions have been made by consensus.
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\1\ FDA has verified all Web site addresses cited in this
document, but FDA is not responsible for any subsequent changes to
the Web sites after this document has published in the Federal
Register.
\2\ 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 taking. 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://www.unep.org/ozone/mop/mop-reports.shtml.
\3\ 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 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 stated that the Parties that are
developed countries would 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, Canada, 1997).
Decision XII/2 elaborated on the 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, 2000).
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 that country 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, Italy, 2002).
Decision XV/5 states that no essential uses of CFCs will
be authorized for Parties that are developed countries at the 17th
meeting of the Parties (in autumn 2005), or thereafter, unless the
Party requesting the essential-use allocation has submitted an action
plan. Among other items, the action plan should include a specific date
by which the Party plans to 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\4\ in the summer of 2005 (Nairobi, Kenya,
2003).
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\4\ 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
subsequently be acted on by a meeting of the Parties to the Montreal
Protocol.
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In addition to fulfilling our obligations under the Clean Air Act
and other provisions of the Montreal Protocol, this rule is intended to
provide, for purposes of Decision XV/5, the specific date after which
the United States will not request essential-use allocations of CFCs
for albuterol MDIs.
3. 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),\5\ 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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\5\ 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 EPA].''
4. 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 import 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 import 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 and 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

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includes drugs as well as medical devices.
5. 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
for removing 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 (the 1997 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 1997 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 1999 proposed 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 final
rule) (corrected in 67 FR 49396, July 30, 2002, and 67 FR 58678,
September 17, 2002).
Among other changes, the 2002 final 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
final 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 determined 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. PROVENTIL HFA is manufactured by 3M Co.
(3M) and marketed by Schering-Plough Corp. (Schering). 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. VENTOLIN HFA
is manufactured and marketed by GlaxoSmithKline (GSK). 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
``albuterol HFA MDIs'' to refer to both of these products in this
document. IVAX Corp. (IVAX) has recently begun marketing an albuterol
HFA MDI, but the short period of time that the IVAX MDI has been on the
market prevents us from considering the drug an alternative to
albuterol CFC MDIs for purposes of this rulemaking (see our response to
comment 14 of this document). Albuterol HFA MDIs are the subject of
patents, listed in our publication Approved Drug Products with
Therapeutic Equivalence Evaluations (the Orange Book), which will,
presumably, block the marketing of generic albuterol HFA MDIs until
they expire. See our response to comment 36 of this document for a
discussion of the patent issues that were raised in this rulemaking.
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, which concerns MDIs
with albuterol as the sole active ingredient. This rule will not affect
the essential-use status of COMBIVENT.

III. Comments on the 2004 Proposed Rule

On June 10, 2004, we held a meeting of the Pulmonary-Allergy Drug
Advisory Committee (the PADAC meeting) to discuss the issues involved
in removing the essential-use designation for albuterol MDIs (see the
Federal Registers of May 11, 2004 (69 FR 26169), and June 2, 2004 (69
FR 31126)). Presentations were made by 13 speakers representing patient
advocacy groups, medical professional organizations, an industry
organization, an environmental advocacy group, an economics consulting
firm, GSK, Schering, Honeywell Chemicals (Honeywell), and IVAX. We
address the comments made in written material submitted to the
committee and oral comments made during the open public hearing and
committee discussion portions of the meeting in addition to the written
and electronic comments submitted to the docket in response to the 2004
proposed rule.\6\
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\6\ 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) (Stakeholders' petition). The Stakeholders' petition
requested that we initiate rulemaking to remove the essential-use
designation of albuterol MDIs. Several comments were submitted in
response to the petition. All of the opinions and information in
those comments, with one exception (see comment 39 of this
document), were also contained in testimony at the PADAC meeting or
in comments on the proposed rule. In nearly every case, parties
submitting comments on the petition also testified at the PADAC
meeting, submitted comments on the proposed rule, or both.
Accordingly, with the exception of comment 39 of this document, we
will not be directly responding in this document to the
Stakeholders' petition or the comments on the petition.
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We received over 75 written and electronic comments in response to
the 2004 proposed rule. They were submitted by patients, health care
providers, patient advocacy groups, professional groups, manufacturers,
a law firm, an economics consulting firm, and industry organizations.
Most of the parties who spoke at the PADAC meeting also submitted
written comments.

A. General Comments

(Comment 1) We received several comments that expressed general
approval for the 2004 proposed rule.

[[Page 17172]]

We appreciate the effort that the people who submitted these
comments, and all other comments, made in expressing their opinions on
this important rulemaking.
(Comment 2) We received several comments that expressed a general
opposition to the phaseout of albuterol CFC MDIs, without giving any
reasons for the opposition.
We cannot address these general comments. Comments that gave
specific reasons why the person submitting the comment opposes the
elimination of the essential-use designation for albuterol CFC MDIs
will be discussed in the appropriate sections of this document.
(Comment 3) A few comments seemed to be based on a perception that
this rulemaking would remove all albuterol MDIs from the market.
The perception is inaccurate. This rulemaking is based on the fact
that there will be at least two different albuterol MDIs that are
acceptable alternatives under Sec. 2.125(g) available after the rule
goes into effect.
(Comment 4) Several comments were made advocating an expeditious
phaseout of albuterol CFC MDIs. A few comments recommended we proceed
slowly and cautiously.
We believe this final rule provides for the phaseout of albuterol
CFC MDIs with a speed that is consistent with our duty to protect the
public health and our legal obligations.
(Comment 5) One comment requested we publish this rule by December
31, 2004.
We did not publish this rule by December 31, 2004, because it
involves complicated and sensitive issues that required extensive
consultation and deliberation within FDA and the Department of Health
and Human Services (HHS), and with EPA and other Federal agencies. We
have issued this rule in the most expeditious manner, consistent with
the complexities and sensitivity of the issues involved.
(Comment 6) One comment asked that we consider in this rulemaking
the availability of CFC drug products that do not have a non-CFC
substitute, the availability of generic albuterol MDIs, and the impact
that higher priced drugs may have on the public health.
As we discuss in several places in the 2004 proposed rule and this
document, issues of price and generic competition were major concerns
to us. However, because this rulemaking deals exclusively with the
essential-use designation for albuterol MDIs, we did not examine the
availability of non-CFC substitutes for drug products other than
albuterol CFC MDIs.
(Comment 7) One comment stated we did not adequately communicate to
the medical community the details of our policy regarding CFC MDIs. The
comment expressed concern that we did not give a timeframe for the
phaseout of albuterol CFC MDIs.
We believe we have done a good job of keeping the public and the
medical community informed on our policy regarding the elimination of
essential-use designations for medical products. We first discussed our
general policy on the issue in the 1997 ANPRM. We received nearly
10,000 comments in response to the 1997 ANPRM, which demonstrates that
this document received wide publicity. We received additional comments
in response to the 1999 proposed rule, which proposed changes in Sec.
2.125 to provide a mechanism for eliminating essential uses. A citizen
petition was submitted on behalf of the U.S. Stakeholders Group on MDI
Transition (stakeholders group) on January 29, 2003 (Docket No. 2003P-
0029/CP1), essentially requesting that we initiate this rulemaking.
This stakeholders group consists of both patient advocacy and
professional organizations. These groups were aware of our policies.
FDA staff has spoken several times before professional medical
organizations, patient advocacy groups, and the National Asthma
Education and Prevention Program Coordinating Committee of the National
Institutes of Health. FDA staff have also answered countless telephone
calls and correspondence on the subject. We have provided press
releases and opportunities for interviews to the general, trade, and
professional media. We believe we have done what can be reasonably
expected to inform the public and the medical profession. However, we
were not able to provide a timeframe for eliminating the essential-use
designation for albuterol MDIs. We specifically solicited comments on
an appropriate effective date for the elimination of the essential-use
designation for albuterol MDIs. The effective date could not be
established until we had finished our evaluation of the comments
submitted in response to the 2004 proposed rule, prepared a draft of
this document, and consulted with EPA and other Federal agencies.

B. 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 with the Same Route of Administration, for
the Same Indication
We did not receive any comments disagreeing with our tentative
conclusions stated in the 2004 proposed rule, or addressing the
conclusions in any substantive way, that albuterol HFA MDIs have the
same active moiety with the same route of administration for the same
indications as albuterol CFC MDIs. We therefore finalize our tentative
conclusion that albuterol HFA MDIs have the same active moiety with the
same route of administration for the same indications as albuterol CFC
MDIs.
2. Approximately the Same Level of Convenience of Use
(Comment 8) One comment asserted that the VENTOLIN HFA MDIs were
not an adequate alternative for albuterol CFC MDIs because the VENTOLIN
HFA MDI requires more force to operate.
Although we do have some data on the force needed to operate the
various albuterol MDIs, because that information comes from different
sources using different measuring techniques and apparatus, we are not
able to meaningfully compare the amounts of force needed to operate
albuterol HFA MDIs compared to the force needed for albuterol CFC MDIs.
However, of the approximately 20 comments we received that indicated
that the person submitting the comment had some experience using
albuterol HFA MDIs, only one complained that the albuterol HFA MDIs
required excessive effort to operate. None of the thirteen comments
from health care providers indicated that their patients had problems
operating the albuterol HFA MDIs. The PROVENTIL HFA MDI is somewhat
shorter and wider than the VENTOLIN HFA MDI. Patients who find it
difficult to apply adequate pressure to the VENTOLIN HFA MDI may wish
to try the shorter PROVENTIL HFA MDI or other albuterol HFA MDIs that
may come onto the market.
(Comment 9) One comment said that the VENTOLIN HFA MDIs were not an
adequate alternative for albuterol CFC MDIs because the VENTOLIN HFA
MDI needs to be primed before use.
The approved labeling for both PROVENTIL HFA and VENTOLIN HFA
recommend that patients prime the MDI before using it for the first
time and in cases where the MDI has not been used for more than 2 weeks
by releasing four

[[Page 17173]]

test sprays into the air, away from the face. The approved labeling for
PROVENTIL CFC MDIs and Warwick brand albuterol CFC MDIs contain a
similar instruction about priming, but recommend priming if the MDI has
not been used for 4 days, as opposed to the more convenient 2 weeks for
the albuterol HFA MDIs. The approved labeling for VENTOLIN CFC MDIs,
and for the generic albuterol CFC MDIs which refer to the VENTOLIN CFC
MDI, contain an essentially identical recommendation, but refer to the
operation as ``test sprays'' rather than priming. These test sprays are
recommended if these albuterol CFC MDIs have not been used for more
than 4 weeks. Therefore, priming is recommended for all of the
albuterol CFC MDI products affected by this rulemaking. The only
difference between albuterol CFC MDIs and albuterol HFA MDIs that would
inconvenience patients is the shorter period of non-use before priming
is recommended for the albuterol HFA MDIs compared to VENTOLIN CFC MDIs
and the generic albuterol CFC MDIs which refer to the VENTOLIN CFC MDI.
We consider this difference to be at most a minor inconvenience, and
not a ``significant [variation] in convenience that materially
impede[s] patient compliance.'' (See the 2002 final rule (67 FR 48370
at 48377).) When we compare the albuterol HFA MDIs to PROVENTIL CFC
MDIs and Warwick brand albuterol CFC MDIs, the albuterol HFA MDIs are
actually more convenient, because of the longer period of non-use
before priming is recommended.
(Comment 10) One comment stated that the VENTOLIN HFA MDIs were not
an adequate alternative for albuterol CFC MDIs because the float test
cannot be used to determine whether the VENTOLIN HFA MDI is empty.
The float test is a widely described, but inaccurate, method of
ascertaining whether an MDI is empty by seeing if it floats. In
addition to being an inaccurate method to ascertain whether an MDI
still contains usable quantities of the drug, the float test can damage
the MDI (See Refs. 1 and 2). The float test is not recommended in the
approved labeling of any albuterol CFC MDI. The only accurate way to
determine whether an MDI still contains usable quantities of the drug
is to keep track of the number of actuations. This is true for both
albuterol CFC and HFA MDIs. Therefore we cannot view the inability to
perform the float test on the albuterol HFA MDIs as a ``significant
[variation] in convenience that materially impede patient compliance.''
(See the 2002 final rule (67 FR 48370 at 48377).)
We find that albuterol HFA MDIs have approximately the same level
of convenience of use as albuterol CFC MDIs.

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

(Comment 11) At the PADAC meeting a representative of GSK stated
GSK was currently producing approximately 300,000 albuterol HFA MDIs
annually at their Zebulon, NC, plant. She further stated the current
installed capacity at Zebulon is 15 million albuterol HFA MDIs
annually, but that it would take GSK 6 to 12 months after a final
decision on an effective date in this rulemaking to hire staff and
reconfigure existing space to take full advantage of the installed
capacity. She stated it would take GSK 12 to 18 months after a final
decision on an effective date in this rulemaking to install additional
manufacturing equipment and secure required component supplies to
enable GSK to manufacture 30 to 33 million albuterol MDIs.
A representative of Schering stated at the PADAC meeting that 3M
would be able to manufacture enough albuterol MDIs to meet Schering's
``share of the expected demand'' for approximately 50 million albuterol
HFA MDIs (transcript of PADAC meeting at p. 130). Answering a question
from a committee member, the Schering representative clarified that his
statement regarding Schering's and 3M's share of the manufacturing
capacity was consistent with the earlier statements made on behalf of
GSK.
In a subsequent written comment (2003P-0029/C20), GSK revised its
production estimates and stated they would begin increasing production
before the publication of this rule, and that they currently
anticipated having the capacity to produce 30 million albuterol HFA
MDIs annually by December 31, 2005. GSK further said they will also
begin building up their inventory at least 3 months before the
effective date of this rule. GSK also said they would reevaluate their
expansion plans if the effective date of this rule were substantially
beyond December 31, 2005.
Schering also revised their projections on increasing production
capacity in a written comment submitted after the PADAC meeting (2003P-
0029/C31). Schering said they will have adequate production available
to meet demand for albuterol HFA MDIs by December 2005. Schering also
said they would reevaluate their expansion plans if the effective date
of this rule were substantially beyond December 2005. 3M, which
produces the albuterol HFA MDIs Schering markets, confirmed Schering's
comment by stating that they will have the capacity to manufacture 30
million albuterol HFA MDIs annually by December 31, 2005.
These projections were major considerations we took into account in
establishing the effective date for this rule. We discuss our rationale
for setting a December 31, 2008, effective date in our response to
comment 32 of this document.
(Comment 12) A comment from a manufacturer of HFA-134a stated there
would be more than adequate supplies of HFA-134a for albuterol MDIs if
the essential-use designation is removed.
We appreciate this confirmation that adequate supplies of HFA-134a
will exist to meet the increased demand for the propellant.
(Comment 13) A few comments from patients expressed concerns that
shortages of albuterol MDIs may result from the elimination of the
essential-use status of albuterol MDIs. Comments from a trade
organization and a chain drug store expressed concerns about whether
production capacity for albuterol HFA MDIs would be in place as quickly
as had been discussed in the 2004 proposed rule.
The issue of adequate supply and production capacity has been key
to this rulemaking. We regard the statements by GSK, Schering, and 3M
that they will have adequate production in place as the best evidence
on the availability of production capacity. When we chose December 31,
2008, as the effective date of this rule, we did so with every
reasonable expectation that adequate supplies and production capacity
would be in place by December 31, 2008.
(Comment 14) A representative of IVAX stated at the PADAC meeting
that IVAX had submitted an NDA for an albuterol HFA MDI in January
2003, and received an approvable letter\7\ from FDA for the NDA on
November 28, 2003. He also said IVAX had submitted a separate NDA for
an albuterol HFA breath-actuated inhaler in August 2003. He said he
expected the products to be on the market in the near future. He stated
that IVAX would soon have the capacity to manufacture 50 to 60 million
HFA MDIs a year at IVAX's Waterford,

[[Page 17174]]

Ireland, plant, although he did not specify what proportion of that
capacity would be allocated to albuterol HFA products or to products
for the U.S. market.
---------------------------------------------------------------------------

\7\ An ``approvable letter'' is a written communication to an
applicant from FDA stating that we will approve the NDA if specific
additional information or material is submitted or specific
conditions are met. An approvable letter does not constitute
approval of any part of an NDA and does not permit marketing of the
drug that is the subject of the NDA (21 CFR 314.3).
---------------------------------------------------------------------------

We did not consider this information in making our decision on the
essential-use designation for albuterol MDIs. The IVAX albuterol HFA
MDI was approved on October 29, 2004, and introduced into the market in
December 2004. Because this product has been on the market for such a
short time, the available U.S. postmarketing use data is inadequate for
purposes of Sec. 2.125(g)(3)(iii). IVAX's albuterol HFA breath-
actuated inhaler has not been approved or marketed. Section
2.125(g)(4)(i) requires alternative products to be marketed. In
addition, because the product has not been marketed, there can be no
U.S. postmarketing use data available to allow us to evaluate whether
the breath-actuated inhaler will be an acceptable alternative to
albuterol CFC MDIs.
(Comment 15) One comment asserted the entire supply of albuterol
HFA MDIs for the United States would be produced at one GSK facility
and one 3M facility. The comment concluded that adequate supplies of
albuterol HFA MDIs were insufficient because it was unclear whether one
facility could supply the entire market if the other facility were
forced to close.
We appreciate the concerns expressed in this comment; however, the
factual premise for the comment is misstated. We believe that a switch
to albuterol HFA MDIs will improve the security of the U.S. supply of
albuterol MDIs. Immediately after the phaseout of albuterol CFC MDIs,
we will have one GSK facility and two 3M/Schering facilities supplying
the U.S. market for albuterol MDIs. This compares favorably to the
current situation with albuterol MDIs, where one Schering facility and
one IVAX facility supply 95 percent of the U.S. market for albuterol
CFC MDIs (comment from NERA dated August 13, 2004 (2003P-0029/C25)),
exhibit 4; and corrected comment from GSK, dated August 25, 2004
(2003P-0029/CR1). IVAX's recently approved albuterol HFA MDI, although
not considered an alternative product for purposes of this rule (see
our response to comment 14 of this document), gives additional
assurance that there will be adequate supplies of albuterol HFA MDIs if
there is an interruption of production at one of the GSK or 3M approved
manufacturing sites. We also would like to point out that GSK and 3M
have overseas production facilities that are not listed as authorized
manufacturing facilities in the approved NDAs for PROVENTIL HFA and
Ventolin HFA. These facilities may be able to export albuterol HFA MDIs
to the United States in an emergency shortage situation.
In our rulemaking establishing the criteria for eliminating an
essential-use designation, we considered requiring multiple production
sites to ensure a secure supply of non-ODS drug products (see the 1997
ANPRM (69 FR 10242 at 10245), the 1999 proposed rule (64 FR 47719 at
47723), and the 2002 final rule (67 FR 48370 at 48377)). We chose not
to require multiple production sites for the alternative products as a
criterion for eliminating the essential-use designation. In any case,
albuterol HFA MDIs can be manufactured at three or more sites, which
will provide a high degree of security for continued supplies of
albuterol HFA MDIs, compared to the supply of other drugs intended for
treatment of serious or life-threatening diseases, many of which are
only manufactured in one facility.
(Comment 16) One comment recommended we delay the effective date
for this rule until albuterol MDIs from IVAX and Sepracor Inc.
(Sepracor) are on the market to ensure adequate supplies and provide
price competition. Another comment recommended we establish an earlier
effective date if the albuterol MDIs from IVAX and Sepracor Inc., are
approved.
The IVAX albuterol HFA MDI is already approved (see our response to
comment 14 of this document). Sepracor's levalbuterol tartrate\8\ MDI
XOPENEX HFA was approved on March 11, 2005, but has not been marketed
by the time this document was published. Because XOPENEX HFA has not
been marketed, we cannot consider it an alternative to albuterol CFC
MDIs (see our response to comment 14 of this document). While we
believe that the presence of additional suppliers of non-ODS albuterol
products would be desirable for the reasons given in the comment, we do
not believe they are necessary for the purposes of this rulemaking.
Based on statements from GSK, Schering, and 3M, we expect that adequate
production capacity for alternative products evaluated under Sec.
2.125(g) will exist by the effective date of this rule. As we discuss
in our responses to comment 18 and in section V of this document, we
also believe that anticipated prices for albuterol HFA MDIs will not
prevent patients from being adequately served by the albuterol HFA
MDIs, even without the downward price pressure of additional
competition.
---------------------------------------------------------------------------

\8\ Levalbuterol tartrate is the tartrate salt of levalbuterol,
the single R-enantiomer of albuterol, which is the active ingredient
in both CFC and HFA MDIs as a racemic mixture of the two
stereoisomers (R and S) at a 1:1 ratio. We have not determined
whether we will, in the future, consider products whose active
ingredient is a stereoisomer to be alternatives to drug products
whose active ingredient is the corresponding racemic mixture.
---------------------------------------------------------------------------

We find that supplies and production capacity for albuterol HFA
MDIs will exist at levels sufficient to meet patient needs by December
31, 2008.

D. Adequate U.S. Postmarketing Use Data is Available for the Non-ODS
Products

We did not receive any substantive comments about whether adequate
U.S. postmarketing use data is available for the albuterol HFA MDIs. We
therefore finalize our tentative conclusion that adequate U.S.
postmarketing use data is available for PROVENTIL HFA and VENTOLIN HFA,
the albuterol HFA MDIs that we considered as alternatives in this
rulemaking.

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

(Comment 17) A representative of GSK speaking at the PADAC meeting
described GSK's Bridges to Access program. Bridges to Access provides
GSK drugs at very low cost to lower-income individuals and families.
She also mentioned GSK's Orange Card Program and the Together Rx
program in which GSK participates. Both of these programs allow
eligible Medicare patients to purchase drugs at significantly reduced
prices. She added that GSK intended to annually distribute 2 million
VENTOLIN HFA MDIs to physicians as samples. She also said GSK expected
that many physicians would primarily provide these samples to their
lower-income patients.
A subsequent written comment from GSK provided additional
information on the Bridges to Access, Orange Card, and Together Rx
programs. The comment also describes a Ventolin HFA Savings Check
program which will distribute at least 3 million $10 coupons for use in
purchasing VENTOLIN HFA MDIs.
A representative of Schering speaking at the PADAC meeting said
Schering's SP Cares program, which is similar to GSK's Bridges to
Access program, distributes free drugs, including PROVENTIL HFA, to
low-income uninsured patients.
A written comment asserted that the Bridges to Access program
provided albuterol HFA MDIs to only approximately 1.4 percent of the
uninsured patients who need albuterol MDIs, and that the program would
have to be expanded to an extreme degree to

[[Page 17175]]

provide meaningful supplies of albuterol MDIs to all uninsured
patients. This comment also asserted that GSK's commitment to annually
provide 2 million free albuterol HFA MDIs would have a limited benefit
to the uninsured population because large numbers of uninsured patients
receive medical care in the emergency departments of hospitals rather
than in a physician's office, and it is unlikely that the free
albuterol HFA MDIs will be distributed to the emergency departments.
This comment was submitted before GSK's comment describing the Ventolin
HFA Savings Check program.
Another comment stated that any patient assistance program must be
targeted to those most in need, particularly low-income children and
minority populations, while yet another comment stressed the importance
of patient assistance programs in the transition to albuterol HFA MDIs.
We took these comments into consideration in determining that
patients would be adequately served by albuterol HFA MDIs. These
patient assistance programs have the potential to alleviate
difficulties that lower income patients may have in obtaining the
higher-priced albuterol HFA MDIs.
We agree with the comment that stated that these programs must
carefully target the populations most in need of financial assistance
in procuring needed albuterol MDIs, and we strongly recommend that GSK
and Schering take all reasonable steps to ensure that their programs
serve patients with the greatest needs, regardless of whether those
patients are treated in a physician's office, clinic, or hospital
emergency department. This targeting is particularly important in
distributing free albuterol HFA MDIs.
We believe that many of the concerns expressed by the comment
critical of GSK's Bridges to Access are valid, but that the comment
underestimates the positive effect that Bridges to Access and other
patient assistance programs can have. The estimate in the comment did
not factor in the 2 million free albuterol HFA MDIs GSK has committed
to distribute to physicians as samples and whatever free albuterol HFA
MDIs Schering may distribute. The comment also could not factor in the
effect of GSK's Ventolin HFA Savings Check program. With successful
targeting, these free albuterol HFA MDIs and $10 coupons should have a
beneficial impact; with less successful targeting the impact could be
very limited (see section VII.D.2 of this document). The comment also
ignores the potential impact of Schering's SP Cares program, which is
similar to GSK's Bridges to Access program. We recognize that the
Bridges to Access and SP Cares programs will have to expand to reach
all uninsured low and moderate income patients who will need albuterol
HFA MDIs, but the degree of expansion required would be smaller than
that described in the comment critical of the Bridges to Access
program. We also believe that GSK and Schering understand the need to
expand these programs, and that this understanding was implicit in
their testimony at the PADAC meeting and written comments (see pp. 5-6
of GSK's corrected comment of August 25, 2004 (2003P-0029/CR1) and p. 4
of Schering's comment of August 13, 2004 (2003P-0029/C31)).
(Comment 18) A speaker at the PADAC meeting said because albuterol
HFA inhalers retail for $20 more than generic albuterol CFC MDIs, an
early phaseout of albuterol HFA MDIs could result in a total $5 billion
in additional treatment costs until HFA inhalers come off patent. The
speaker also said the economic burden would fall most heavily on those
Americans least able to pay the price, with a disproportionate effect
on minorities, inner-city children, elderly patients on fixed incomes,
and the rural poor. The speaker asserted that eliminating the
essential-use designation before lower-priced generic albuterol HFA
MDIs are on the market would force many lower-income patients to
discontinue use of albuterol MDIs. The speaker also referred to a
recent study in JAMA: The Journal of the American Medical Association
indicating that increasing copayments can reduce prescription drug use
up to 32 percent. She further stated this would result in a cascading
increase in total health care costs, as patients who discontinue their
albuterol are admitted to emergency rooms and hospital wards.
A speaker representing an economics consulting firm under contract
to GSK stated at the PADAC meeting that patients would be adequately
served by albuterol HFA MDIs. He projected the average price per MDI
would increase by $9.87 and the yearly average cost per patient would
rise by $16.02. He also said adequate programs were in place to
minimize the adverse impact on lower-income patients.
Several comments from patients, health care professionals, and
other parties stated the elimination of lower-priced generic albuterol
MDIs that would result from this rule would force many patients to
discontinue the use of albuterol MDIs, with significant adverse impact
on their health, increased hospitalizations, loss of time at work, and
a worsening quality of life. Many of these comments recommended the
essential-use status of albuterol MDIs not be removed until after
generic albuterol HFA MDIs are approved and marketed.
Other comments agreed with our tentative conclusion stated in the
2004 proposed rule that patients will be adequately served by albuterol
HFA MDIs.
While we do not agree with the statement from the speaker from the
contract economic consulting firm that the average price per MDI would
only increase by $9.87 and that the yearly average cost per patient
would only rise by $16.02, we do agree with the conclusion of the
speaker that the price of albuterol HFA MDIs will not prevent patients
from being adequately served. As discussed in more detail in section V
of this document, we estimate that the retail cash price per MDI would
increase by $27 and the average yearly cost to uninsured patients would
rise $95. While higher drug prices are undesirable, we do not believe
that asthma and COPD patients will be forced to stop using albuterol
MDIs because of price increases. We believe that the programs discussed
in comment 17 of this document can, if properly utilized, provide a
safety net for lower-income patients who otherwise could not afford
this very important drug. Section V of this document contains a fuller
discussion of the economic issues presented by this rulemaking. While
we recognize that sales of albuterol MDIs may decline by approximately
1 or 2 percent as a result of this rulemaking, this decline in sales
does not necessarily equate to patients having to forgo appropriate
treatment of their asthma or COPD because of price increases. There are
many ways patients may modify their behavior in order to minimize the
impact of elimination of generic albuterol MDIs, including: increasing
their use of other asthma and COPD drugs, including non-albuterol
bronchodilators (and thereby decreasing their need for albuterol);
buying fewer MDIs to keep in different locations because they have
chosen to limit the number of MDIs they have beyond the one patients
generally carry on their person. Patients with infrequent bouts of
bronchospasm may also choose not to purchase albuterol HFA MDIs that
the patients believe they might not use, even though the patients are
financially able to do so.
(Comment 19) A speaker at the PADAC meeting said an FDA policy that
removed lower priced generic drugs from the market was contrary to the
intent of the Drug Price Competition and Patent Term Restoration Act of
1984

[[Page 17176]]

(Public Law 98-417) (Hatch-Waxman amendments). A written comment
asserted the real intent of this rulemaking was to remove generic
albuterol MDIs from the market.
We recognize that one of the consequences, although not one we
desire, of this rulemaking will be the removal, for a period of time,
of generic albuterol MDIs from the market. We agree with the speaker at
the PADAC meeting that one of the general intentions of the Hatch-
Waxman amendments is to encourage the entry of lower-priced generic
drug products into the market. However, another key purpose of the
Hatch-Waxman amendments is to encourage significant innovations in
human drugs (see generally 130 Cong. Rec. H9113-14 and H9121-22 (Sept.
6, 1984) (statements of Rep. Waxman)). The development of HFA inhalers
represents large investments of time and money by innovator firms. This
investment resulted in innovative products that significantly serve the
public health by protecting the stratospheric ozone. While the
provisions of the Hatch-Waxman amendments do not directly apply to this
rulemaking, the underlying general policy of encouraging innovation and
protecting investment in research and development does apply as much as
the policy of encouraging the availability of lower-priced generic
drugs. Most importantly, there is no specific provision in the Hatch-
Waxman amendments that prohibits us from removing generic albuterol
MDIs from the market. There is, however, specific language in the Clean
Air Act (42 U.S.C. 7671) that requires us to evaluate whether a use of
an ozone-depleting substance in a drug product is, or remains, an
essential use. We are obligated to follow the specific mandate Congress
gave us in the Clean Air Act, rather than one of two general policies
underlying another piece of legislation.
(Comment 20) One comment suggested we approve generic albuterol HFA
MDIs immediately, to lower expenses incurred by asthma patients.
Albuterol HFA MDIs are the subject of patents that may affect the
availability of generic albuterol HFA MDIs until they expire. FDA's
ability to approve generics is constrained by the patent and
exclusivity protections afforded by the Hatch-Waxman amendments. FDA
may not approve generic albuterol HFA MDIs before permitted by law.
(Comment 21) One comment expressed concern that the removal of the
essential-use designation for albuterol MDIs would lead to higher costs
to the Federal Government as a result of the Medicare prescription drug
benefits that will go into effect on January 1, 2006 (see Title I of
the Medicare Prescription Drug Improvement and Modernization Act of
2003 (Public Law 108-173, December 8, 2003)). The comment recommended
that the essential-use designation for albuterol not be removed until
generic albuterol HFA MDIs come on the market, to minimize spending by
the Federal Government.
Although cost to the Federal Government is not a criterion under
Sec. 2.125(g), the availability of prescription drug benefits under
Medicare does affect whether patients are adequately served by the non-
ODS products. In fact, the prescription drug benefits will reduce the
impact of higher prices for albuterol MDIs on Medicare-eligible
patients, who would not otherwise have prescription drug insurance
benefits. This will help ensure that patients are adequately served by
albuterol HFA MDIs.
(Comment 22) A few comments suggested that prices for albuterol HFA
MDIs would increase after the rulemaking. A GSK spokesperson at the
PADAC meeting stated that GSK had committed to a price freeze on
VENTOLIN HFA until December 31, 2007. The commitment was repeated in
GSK's subsequent written comments.
We believe that GSK's price freeze will be effective in keeping
prices at the current level through much of the transition period
before the effective date of this rule. Although Schering has not made
a similar commitment, it seems unlikely that they will raise their
prices knowing that one of their two competitors is committed to a
price freeze. The presence of both GSK and Schering in the market
should provide downward pressure on prices for albuterol HFA MDIs that
will continue after the effective date of this rule (see pp. 13-20 of
the National Economic Associates' comment of August 13, 2004 (2003P-
0029/C25), and section V.D.1 of this document). Even if this pressure
does not result in price decreases, it may prevent price increases. A
representative of IVAX indicated at the PADAC meeting that IVAX's
albuterol HFA MDI would be priced lower than PROVENTIL HFA and VENTOLIN
HFA. IVAX's entry into the albuterol HFA MDI market and the potential
market entry of additional albuterol HFA MDIs will provide additional
downward pressure on prices even before the entry of generic albuterol
HFA MDIs.
(Comment 23) One comment objected to the elimination of the
essential-use designation for albuterol MDIs, saying the price of
albuterol HFA MDIs is more than $100 per MDI compared to generic
albuterol CFC MDIs, which cost less than $10 per MDI.
The issue of the impact of higher prices for albuterol HFA MDIs is
one that we have given a great deal of thought, but the difference is
not nearly as great as this comment states. The weighted average
(across all payer types) of retail prescription price for generic
albuterol CFC MDIs during the first half of 2004 was about $13.50 per
MDI and the weighted average retail prescription price for albuterol
HFA MDIs was about $39.50 per MDI (see section V.C.6 of this document).
As we discuss in our response to comment 18 and section V of this
document, we do not believe that this price difference prevents
patients from using albuterol HFA MDIs.
(Comment 24) One comment recommended that we perform a cost-benefit
analysis using Medical Expenditure Panel Survey (MEPS) data from the
Agency for Healthcare Research and Quality (AHRQ).
The analysis of impacts described in section V of this document
uses the MEPS data. While the analysis does look at both the costs and
benefits of this rulemaking, we would not characterize the analysis as
a full cost-benefit analysis because we are unable to fully quantify
the public health costs and environmental benefits in dollar terms;
however, we do quantify these costs and benefits to the extent we are
able.
(Comment 25) One comment asserted that, while our analysis in the
2004 proposed rule of the economic impact of this rulemaking on
patients was appropriate to the extent the analysis focused on whether
higher prices would deter patients from using albuterol MDIs, those
portions of the economic analysis that dealt with more general societal
costs were inappropriate and contrary to the provisions of Sec. 2.125.
We are required to examine the broader societal costs and benefits
of any rulemaking. Executive Order 12866 directs us to assess all costs
and benefits of available regulatory alternatives and, when regulation
is necessary, to select regulatory approaches that maximize net
benefits. The Regulatory Flexibility Act (5 U.S.C. 601-612) requires
agencies to analyze regulatory options that would minimize any
significant impact of a rule on small entities. Section 202(a) of the
Unfunded Mandates Reform Act of 1995 (Public Law 104-4) requires that
agencies prepare a written statement that includes an assessment of
anticipated costs and benefits before proposing any rule that includes
any Federal mandate that may result in significant expenditure by
State, local,

[[Page 17177]]

and tribal governments, or the private sector.
(Comment 26) A few comments stated albuterol HFA MDIs were
unacceptable alternatives because they did not propel the drug with
adequate force into the lungs. Other comments stated that they had to
use an albuterol HFA MDI several times to get the same effect they had
received from significantly fewer uses of an albuterol CFC MDI. Several
comments from patients stated that their experience indicated albuterol
HFA MDIs were less effective than albuterol CFC MDIs, while other
comments from patients stated that they had found albuterol HFA MDIs to
be more effective than albuterol CFC MDIs. One physician commented that
she believed HFA MDIs were better drug delivery systems than CFC MDIs.
The wording of certain comments leads us to believe that at least
some of people submitting these comments may be confusing dry powder
inhalers (DPIs) or aqueous (AQ) pumps with HFA MDIs. There are
currently no albuterol DPIs or AQ pumps being marketed. We did not
consider any DPI or AQ pump as a potential alternative to albuterol CFC
MDIs. Other comments may reflect the common misperception that MDIs
propel drugs into the lungs. MDIs do not in fact propel any significant
amount of drug into the lungs. MDIs propel the drug into the mouth and
the drug is then inhaled into the lungs. Albuterol CFC MDIs and
albuterol HFA MDIs work in same way; both contain the active ingredient
as a very fine powder which is delivered in a suspension into the
patient's mouth. MDIs that forcefully deliver the drug suspension may
actually be less effective at delivering the drug into the lungs. In
these instances, a significant portion of the drug may be sprayed onto
the surfaces in the back of the mouth, from which they will be
swallowed rather than inhaled into the lungs. An explanation that we
believe likely for some of these perceived differences is the
possibility that the albuterol HFA MDIs that were being used had
clogged mouthpieces. Cleaning the mouthpieces as described in the
labeling for PROVENTIL HFA and VENTOLIN HFA should alleviate these
problems.
Whatever the perceived differences between albuterol CFC MDIs and
albuterol HFA MDIs may be, clinical studies have shown the albuterol
HFA MDIs are as effective as the albuterol CFC MDIs in treating asthma
and COPD.
(Comment 27) One comment stated we should not remove the essential-
use designation for albuterol MDIs because members of the person
submitting the comment's family are allergic to the lactose contained
in alternative products.
Neither VENTOLIN HFA nor PROVENTIL HFA contains lactose. While
other inhaled drug products for the treatment of asthma and COPD do
contain small amounts of lactose, our determination on the essential-
use designation for albuterol MDIs is based exclusively on the
suitability of VENTOLIN HFA and PROVENTIL HFA as alternatives.
(Comment 28) One person said in his comment he had an adverse
reaction that included tachycardia (elevated heart rate) after taking
PROVENTIL HFA. He attributed the adverse event to ethanol, which is an
inactive ingredient in PROVENTIL HFA and to which he is sensitive.
Reports of an allergic reaction attributed to the very small
amounts of ethanol contained in PROVENTIL HFA are extremely rare.\9\
VENTOLIN HFA, which does not contain ethanol, should be considered for
asthma and COPD patients who may be sensitive to ethanol. Unlike the
albuterol CFC MDIs, VENTOLIN HFA and PROVENTIL HFA do not contain
identical active ingredients, and patients having difficulties with one
product should discuss with their physicians switching to the other.
---------------------------------------------------------------------------

\9\ We are only aware of one report in our MedWatch system of an
allergic reaction attributed to the very small amounts of ethanol
contained in PROVENTIL HFA. VENTOLIN HFA, which does not contain
ethanol, should be considered for asthma and COPD patients who may
be sensitive to ethanol. MedWatch is the FDA safety information and
adverse event reporting program, which allows health care
professionals and consumers to report serious problems that they
suspect are associated with the drugs and medical devices they
prescribe, dispense, or use.
---------------------------------------------------------------------------

(Comment 29) One person said in his comment he had an asthma attack
after his first use of a QVAR (beclomethasone dipropionate) HFA MDI. He
attributed the adverse event to the HFA propellant in the QVAR MDI and
concluded that HFA MDIs would not serve patients who were sensitive to
HFA.
Another person said in her comment her use of an albuterol HFA MDI
caused irritation and triggered an asthma attack.
A third comment suggested HFA MDIs could be less likely to cause
paradoxical bronchospasm because of tighter specifications for the
various compounds in the MDIs.
Bronchospasm may occur after using any inhaled asthma drug,
including both albuterol CFC and HFA MDIs. The approved labeling for
both albuterol CFC and HFA MDIs, as well as QVAR and most other
approved inhaled drugs, describe paradoxical bronchospasm as an adverse
event that can be expected in a small number of patients. Paradoxical
bronchospasm seems to be associated with the first use of an MDI or
vial of an inhaled drug. The warnings about paradoxical bronchospasm
represent a general concern with inhaled drugs, and do not represent a
special concern for albuterol CFC and HFA MDIs or QVAR. Paradoxical
bronchospasm is very rare; a study conducted in the United Kingdom of
10,472 patients regularly using VENTOLIN EVOHALER (an albuterol HFA MDI
marketed in the United Kingdom that is substantially similar to
VENTOLIN HFA) over five 3-month observation periods, did not show any
incidents of paradoxical bronchospasm (Ref. 3). We have not seen any
evidence from the clinical studies of various HFA MDIs that this type
of adverse event is more or less common with HFA MDIs than with CFC
MDIs. Absent other data, we cannot assume that the adverse events
described in the comments were caused by the HFA propellant in the
MDIs.
(Comment 30) A few comments stated albuterol HFA MDIs left a
powdery residue at the back of the throat. One person said in her
comment that after using an albuterol HFA MDI she felt the need to
rinse her mouth out. One comment said this tendency to leave a powdery
residue could lead to thrush and other infections.
A very small number of patients have reported an unpleasant powdery
residue in the oral cavity after use of an albuterol HFA MDI. Any MDI
can leave a residue in the oral cavity. Use of a spacer can minimize
the amount of residue left in the mouth. Patients who experience this
problem may wish to speak to their physicians about using a spacer with
the MDI. We do not consider problems with a powdery residue to be
either prevalent enough or serious enough to prevent patients from
being adequately served by albuterol HFA MDIs.
Thrush, also known as candidiasis, is occasionally seen with the
use of inhaled corticosteroids. Although thrush may be seen in patients
who are taking both inhaled corticosteroids and inhaled albuterol,
there is no evidence to suggest that use of albuterol or HFA
contributes to the development of thrush. Accordingly, we do not
believe thrush to be a problem with use of albuterol HFA MDIs.
(Comment 31) One comment stated albuterol HFA MDIs are not an
adequate substitute because they cannot be used with spacers.
Commercially available spacers can be used with both albuterol HFA
MDIs. Patients who are having difficulties with any MDI may wish to
speak to their

[[Page 17178]]

physicians about using a spacer in conjunction with the MDI.
We find that patients who medically require albuterol CFC MDIs are
adequately served by albuterol HFA MDIs.

F. Effective Date

(Comment 32) Several speakers at the PADAC meeting and comments,
including comments from Schering, 3M, and GSK, recommended an effective
date of December 31, 2005.
Schering, 3M, and GSK have all stated that adequate production
capacity and supplies would be in place by December 31, 2005. However,
the December 31, 2005, date is merely a projected date, and neither
Schering, 3M, nor GSK provided the basis for their projections. No
timelines, construction and installation schedules, or training goals
were provided to us. We have no descriptions of what new machinery must
be procured, nor any idea when that machinery can be up and running.
While we believe that the projections were made in good faith,
unanticipated delays and shortages could push the date on which
adequate production capacity and supplies are in place significantly
beyond December 31, 2005. Due to the lack of underlying information, we
are unable to evaluate the likelihood or length of any possible delays.
If this rule were to go into effect before adequate production
capacity and supplies were in place, there would not be a smooth
transition from albuterol CFC MDIs to albuterol HFA MDIs. We could be
forced to publish a document postponing the effective date. We could
see resumption of production at albuterol CFC MDI lines that had been
closed and increased production to restock supplies of albuterol CFC
MDIs that had been allowed to dwindle in anticipation of the effective
date of this rule. If needed CFCs, MDI components, or production
facilities were unavailable, shortages of albuterol MDIs could exist.
Furthermore, if we were forced to push the effective date of this
rule back because of the failure of manufacturers to have adequate
production capacity and supplies in place, it would be very harmful to
any transition education program. Patients and health care providers
would be provided with different dates by which the transition from
albuterol CFC MDIs to albuterol HFA MDIs would be completed. This could
lead to confusion, lack of trust, and the belief that people would not
have to think about the transition because it would probably be
postponed again.
When we consider how serious and life threatening asthma and COPD
are, and how important albuterol MDIs are in treating asthma and COPD,
it becomes apparent that a conservative estimate of when sufficient
supplies and production capacity will exist and a later effective date
will better ensure that shortages do not happen and a smoother
transition will be made. For these reasons we believe that a December
31, 2005, effective date does not provide an adequate safety margin to
ensure that adequate production capacity and supplies will be in place.
Accordingly, we have determined that December 31, 2008, is a more
appropriate effective date for this rule.
We arrived at a December 31, 2008, effective date with the
expectation that an orderly transition to albuterol HFA MDIs would be
completed by that date. Although significant production and supplies
may be in place prior to this date, in light of the serious
consequences of inadequate supplies and the need to ensure that
vulnerable patients have adequate access, the date of December 31,
2008, ensures that the criteria in Sec. 2.125(g) will be met and that
the transition to albuterol HFA MDIs can be accomplished smoothly. This
transition period between the publication of the final rule and the
effective date ensures that new facilities will be on line, that
manufacturers will have successfully demonstrated their ability to
produce necessary supplies of albuterol HFA MDIs, and patients and
health care providers will be adequately educated about the transition
to albuterol HFA MDIs. After the effective date, section 610 of the
Clean Air Act would prohibit the sales of albuterol CFC MDIs in
interstate commerce. As discussed in response to comment 42 of this
document, the transition time under this rule should allow for
retailers and their suppliers to deplete their stock.
(Comment 33) One comment suggested a 2007 effective date without
giving reasons why this date would be more appropriate than others.
This comment did not provide any information or rationale for the
date, and our rationale for the December 31, 2008, effective date is
set out in our response to comment 32 of this document.
(Comment 34) A few comments asked that we set an effective date
that will allow patients to try different albuterol HFA MDIs to see if
they perform adequately for individual patients.
We believe the December 31, 2008, effective date provides ample
opportunity for patients to work with their healthcare providers to
determine the best substitute.
(Comment 35) Several comments urged us to set the effective date
for this rule late enough to allow lower-priced generic albuterol HFA
MDIs onto the market before the essential-use status of albuterol MDIs
is removed.
As we discussed in our responses to comment 18 and in section V of
this document, we do not believe that presence of generic albuterol HFA
MDIs is necessary to ensure that patients are adequately served by
albuterol HFA MDIs.
(Comment 36) In the 2004 proposed rule we asked for comments ``on
when patents may cease to bar the marketing of generic albuterol HFA
MDIs'' (69 FR 33602 at 33608). We did not receive any substantive
comments on this issue. One comment, while agreeing with us that we do
not have the institutional expertise to evaluate patents, criticized
our statement that ``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'' (69 FR 33602 at 33608). The comment asserted it would be
irresponsible to base any decision on the mere possibility that patents
may be successfully challenged. The comment also stated competition
would not be blocked because of the ability of firms to license HFA MDI
technology from 3M. It also pointed to IVAX as a potential source of
competition.
We did not receive any substantive comments on the validity of the
patents listed in the Orange Book for albuterol HFA MDIs. Because we
have determined that, as we discussed in our response to comment 18 and
in section V of this document, the presence of generic albuterol HFA
MDIs in the market is not necessary to ensure that patients are
adequately served by albuterol HFA MDIs, it is not necessary for us to
reach a conclusion on the validity of those patents. We do not believe
that IVAX or entrants into the albuterol HFA MDI market that license
HFA MDI technology from 3M will be priced as low as current generic
albuterol CFC MDIs. We base this belief on the added expense that
licenses will entail for manufacturers and the past history of drug
pricing. However, we do believe that IVAX and other, potential,
entrants can exert downward pressure on prices that could result in
lower prices than we currently see for albuterol HFA MDIs.
(Comment 37) A representative of Honeywell, speaking at the PADAC
meeting, said Honeywell planned to resume production of CFC propellants
at a Louisiana plant, and gave

[[Page 17179]]

assurances that Honeywell Chemicals could supply CFC propellants for
years to come, if needed. He also said FDA should not consider a
shortage of CFC propellants in establishing a transition strategy.
Honeywell later provided more details on the subject in a written
comment.
Another speaker at the PADAC meeting said Honeywell's resumption of
production at their Baton Rouge plant would violate U.S. law and the
Montreal Protocol. He further said that according to statements made by
Honeywell, current stockpiles of CFCs coupled with production of CFCs
at Honeywell's Netherlands facility, which is scheduled to close at the
end of 2005, should meet U.S. demand for CFCs for use in MDIs until
2008.
Another comment stated it was appropriate for us to take into
account the disruptions in the supply of CFCs caused by Honeywell
ending production of CFCs at their Netherlands facility and the
equivocal legal status of Honeywell's resumption of production of CFCs
at their Baton Rouge facility. It also said we should carefully
scrutinize Honeywell's ability to manufacture pharmaceutical grade CFCs
at the Baton Rouge facility.
Although we discussed Honeywell's continued production of CFCs in
the 2004 proposed rule (69 FR 33602 at 33607-33608), this issue does
not address any of the criteria under which we are making a
determination on the essential-use status of albuterol MDIs. The
criteria in Sec. 2.125(g) direct us to examine the adequacy of
supplies and capacity for the non-ODS substitutes, but not the supplies
and capacity for the ODS product.
(Comment 38) Speakers at the PADAC meeting and written comments
stated that the Parties to the Montreal Protocol were unlikely to
continue to approve the United States' future nominations for
allocations of CFCs for use in MDIs. One comment asked that we
carefully consider the future supply of CFCs in setting an effective
date for this rule. Another comment pointed out that a key raw material
in the production of CFCs is carbon tetrachloride, an ODS that is being
phased out under the provisions of the Montreal Protocol. The comment
asserted that this could lead to a situation where it could be very
difficult to obtain the needed raw materials for the manufacture of
CFCs, even if the manufacture itself was allowed under the Montreal
Protocol. Another comment urged us to not allow the fact that other
Parties to the Montreal Protocol have initiated phaseouts of albuterol
CFC MDIs pressure us into a premature action, pointing out that prices
for albuterol HFA MDIs are lower in other countries.
We are obligated to follow the procedures and criteria in Sec.
2.125 in this rulemaking, and the continued supply of CFCs under the
Montreal Protocol or the phaseout strategies in other countries are not
criteria listed in Sec. 2.125(g) and these issues were not considered
in this rulemaking.
(Comment 39) Prior to publication of the 2004 proposed rule, we
received a comment from a manufacturer of MDI components submitted in
response to the Stakeholders' petition. The manufacturer said it has
the ongoing capacity to supply MDI components necessary for ongoing use
of CFC MDIs, including albuterol CFC MDIs, and it will continue
production as long as there is sufficient demand.
While we appreciate the information contained in this comment, the
continued availability of MDI components necessary for continuing use
of CFC MDIs is also not a criterion under Sec. 2.125(g) upon which we
may base our decision.
(Comment 40) One speaker at the PADAC meeting suggested that FDA
monitor patient compliance and access to albuterol HFA MDIs and reserve
the right to allow a certain number of albuterol CFC MDIs to be sold in
case of a real emergency.
Under the Clean Air Act, a use of an ODS is either essential or it
is not. We are currently unaware of any interpretation of the
provisions of the Clean Air Act that would give us the flexibility to
allow emergency sale or distribution of a CFC MDI once its use is
determined to be non-essential.
(Comment 41) One comment recommended that we not set an effective
date until we are certain that adequate production capacity will exist.
In choosing December 31, 2008, as the effective date of this rule,
we did so with every reasonable expectation that adequate supplies and
production capacity will exist by that time.
(Comment 42) A comment recommended that we not establish a date
beyond which retail pharmacies are barred from selling albuterol CFC
MDIs, even if we did establish a date beyond which albuterol CFC MDIs
could not be manufactured.
The sale of remaining stocks of albuterol CFC MDIs was one of the
factors we considered in establishing an effective date that is well
after the date we expect the transition to HFA MDIs to be substantially
completed by manufacturers of albuterol MDIs. This additional buffer
period should give wholesalers and retailers adequate time to dispose
of stocks of albuterol CFC MDIs. That being said, we do not have the
authority to establish an effective dates for wholesalers and retailers
that differs from an effective date for manufacturers. We can only make
a determination on the date by which the criteria set out in Sec.
2.125(g) will be met and the use of ODSs in albuterol MDIs is no longer
essential. Once a product is no longer an essential use, the
prohibitions in section 610 of the Clean Air Act automatically come
into play. However, section 610 of the Clean Air Act only applies to
sales in interstate commerce. If shipments of albuterol CFC MDIs by
producers have stopped by December 31, 2007, or shortly thereafter,
wholesalers and retailers should not find it difficult to distribute
their stocks by December 31, 2008.

G. CFCs and the Environment

(Comment 43) A few comments asserted that CFCs used in MDIs do not
have an adverse impact on the environment because the CFCs are inhaled
rather than being released into the environment.
Nearly all of the CFCs inhaled into the lungs from an MDI are
almost immediately exhaled into the environment. The small amounts of
CFCs absorbed into the body are later excreted and exhaled without
being broken down. Essentially all of the CFCs released from an MDI end
up in the atmosphere with resulting harm to the stratospheric ozone
layer.
(Comment 44) A few comments asserted that the amount of ODSs
released from albuterol CFC MDIs is insignificant, and eliminating
their use would not provide any environmental benefit.
The United States evaluated the environmental effect of eliminating
the use of all CFCs in an environmental impact statement (EIS) in the
1970s (see 43 FR 11301, March 17, 1978) (the 1978 rule). As part of
that evaluation, FDA concluded that the continued use of CFCs in
medical products posed an unreasonable risk of long-term biological and
climatic impacts (see Docket No. 96N-0057). In 1990, Congress enacted
Title VI of the Clean Air Act, which codified the decision to fully
phase out the use of CFCs over time. Congress did not assign us the
task of determining what amount of environmental benefit would result
from the removal of CFC-containing medical devices, diagnostic
products, drugs, and drug delivery systems from the market. Congress
did instruct us to determine whether such products are essential. This
rulemaking fulfills that obligation.

[[Page 17180]]

(Comment 45) A comment asserted that the Montreal Protocol is
working well and that according to the Executive Summary of the ``World
Meteorological Organization Global Ozone and Research Project--Report
No. 47: Scientific Assessment of Ozone Depletion: 2002'' (Executive
Summary) (available at http://www.unep.org/ozone/Publications/6v_science%20assess%20panel.asp), the continuing use of CFCs in albuterol
MDIs would delay restoration of the Earth's ozone layer to its 1980
condition by an insignificant time past the currently projected date of
2050. The comment quoted the following passage from page xvii of the
Executive Summary:
The updated, best-estimate scenario for future halocarbon mixing
ratios suggests that the atmospheric burden of halogens will return
to the 1980 pre-Antarctic-ozone-hole levels around the middle of the
21st century, provided continued adherence to the fully amended and
adjusted Montreal Protocol. Only small improvements would arise from
further reduced production allowances in the future.
The size of the delay in the date the ozone layer will be restored
to its 1980 condition is not a criterion in determining which medical
devices, diagnostic products, drugs, and drug delivery systems are
essential under the Clean Air Act. These criteria are set out in Sec.
2.125 and are discussed previously in this document. However, we note
that the estimate described in the quoted paragraph assumes ``continued
adherence to the fully amended and adjusted Montreal Protocol.'' As we
discussed in section II.C.2 of this document, Decision IV/2 envisioned
elimination of the production and importation of CFCs by January 1,
1996, by Parties that are developed countries. Although production and
importation of CFCs for use in albuterol MDIs are permitted, year to
year, as an essential use under the Montreal Protocol, we fail to see
how a rule that permits sale and distribution of albuterol CFC MDIs
into 2008 can be characterized as a reduction in production allowances.
The Montreal Protocol is frequently called the most successful
environmental treaty in history, yet its success is based primarily on
voluntary compliance by all of the Parties to the treaty. If the United
States were to continue sale and distribution of ODS products after
adequate alternative products were available, this could lead other
Parties to do the same, eventually threatening the integrity of the
Montreal Protocol. In the words of the Executive Summary cited in the
comment, ``Failure to comply with the Montreal Protocol would delay or
could even prevent recovery of the ozone layer.'' (Executive Summary at
xxv.) The continued existence of a strong Montreal Protocol is in the
best interest of the public health of the United States, and our
failure to take timely action on albuterol MDIs could potentially
weaken the Montreal Protocol.
(Comment 46) One comment criticized our attempts in the 2004
proposed rule to quantify the environmental benefits of this
rulemaking.
We agree with the comment that accurately quantifying the direct
environmental benefits of this rule is very difficult and that
quantifying the indirect environmental benefits may be impossible.
However, as we discussed in our response to comment 25 of this
document, we are under separate legal obligation to examine the broader
societal costs and benefits of any rulemaking, including the
environmental costs and benefits. Accordingly, the discussion of the
environmental costs and benefits of this rule is separate from the
determination as to whether the criteria in Sec. 2.125 have been met.
(Comment 47) One comment stated the amount of CFCs released by MDIs
is negligible compared to naturally occurring CFCs.
There are no naturally occurring CFCs.
(Comment 48) A few comments seemed to confuse CFCs with other
greenhouse gases, such as carbon dioxide and nitrous oxide, when
stating that MDIs were a minor source of CFCs compared to sources such
as power plant and automobile emissions.
While CFCs are considered to be greenhouse gases, we are publishing
this rule because the criteria in Sec. 2.125 have been met, rather
than any contribution CFCs may be making towards global warming.
(Comment 49) A few comments stated that MDIs were a minor source of
CFCs compared to hair spray and deodorants.
CFCs were banned from deodorants, hair spray, and other cosmetics
by the 1978 rule. Cosmetics containing CFCs have not been legally
marketed in the United States since April 15, 1979, the effective date
of the 1978 rule.

H. Comments on the Analysis of Impacts

(Comment 50) We received several comments about our estimates of
the price increases that might result from the proposed rule.
One comment objected to FDA estimates of expected price increases
based on the price gap between albuterol CFC MDIs and albuterol HFA
MDIs from drugstore.com, because the Web site's market share is small
and therefore does not accurately represent market prices. This comment
recommended that we use retail cash albuterol MDI prices from IMS
Health Inc. (IMS). Another comment took average wholesale prices of
albuterol MDIs and inflated them according to average retail markups on
albuterol for cash payers of 28.8 percent for branded MDIs and 363.3
percent for generic MDIs. From this, the comment calculated cash payers
will pay on average $8.61 more per MDI.
Another comment contended that price increases are of limited
importance, because insurers have an incentive to maintain lower
copayments for albuterol. Lower copayments would minimize the costs to
insurers for emergency department visits, hospitalizations, etc. that
result from poorer compliance with albuterol therapy.
A few comments said individuals eligible for Medicare or Medicaid
are unlikely to face higher costs for albuterol as a result of this
rule.
We believe that cash albuterol MDI prices best reflect prices paid
by the uninsured, and, consistent with the comment, have considered
data on retail cash albuterol MDI prices from IMS, which are generally
considered to be the best price data available. Although we did use
prices from drugstore.com in the 2004 proposed rule,\10\ this was done
primarily because we did not have rights to use the IMS data when the
2004 proposed rule was being prepared. IMS retail price data reflect
the impact on consumers better than other measures such as estimates
derived from average wholesale cash prices inflated by average retail
markups for cash payers.
---------------------------------------------------------------------------

\10\ Although the prices derived from IMS data give us much
greater assurance than the prices found on drugstore.com that the
numbers we use accurately reflect market prices, in the case of
albuterol MDIs the differences in prices are not very significant.
The drugstore.com price for generic albuterol CFC MDIs is $13.99,
while the weighted average retail price derived from IMS data is
approximately $13.50. The drugstore.com prices for VENTOLIN HFA and
PROVENTIL HFA are $39.61 and $38.99 respectively, while the weighted
average retail price derived from IMS data for albuterol HFA MDIs is
$39.50. The drugstore.com prices are those posted on February 10,
2005. See section V.C.6 of this document for more information on the
prices derived from IMS data.
---------------------------------------------------------------------------

After reviewing these comments, we continue to believe that the
likely price increase will be approximately the current difference in
price between generic albuterol CFC MDIs and albuterol HFA MDIs,
although competition from IVAX's approved albuterol HFA MDI and other
albuterol

[[Page 17181]]

HFA MDIs that enter the market may lower prices somewhat.
We believe that price increases are an important determinant of
access for individuals without insurance, who are likely to pay the
full amount of price increases out of their own pockets. Copayments for
albuterol MDIs for privately insured individuals may change when this
rule goes into effect, but such changes will be determined by their
insurers. While copayments are generally higher for branded drugs, they
are not necessarily higher for branded drugs that lack a generic
alternative. We are unable to predict how average copayments may change
as a result of the rule.
We agree with the comments suggesting that individuals eligible for
Medicare or Medicaid are unlikely to face higher out-of-pocket costs
for albuterol as a result of this rule.
(Comment 51) Comments were submitted about our use of estimates of
consumers' response to drug price increases taken from the Goldman
article (Ref. 4). One comment noted that elasticity estimates in the
Goldman article were based on a broad range of asthma drugs, many of
which differ from albuterol MDIs in important ways. The comment
contended that these differences prevent us from drawing meaningful
conclusions about how demand for albuterol MDIs will respond to price
increases.
A second comment noted that the proposed rule failed to make use of
estimates in the Goldman article indicating a price elasticity of
demand for asthma drugs as large as -.32.
We recognize the limitations of applying results from the Goldman
article to the market for albuterol MDIs, and have sought to
characterize fully the associated uncertainty. We believe, however,
that focusing on a range of elasticity estimates from -.05 to -.15 is
reasonable and appropriate given available information.
We used the Goldman article because it provides recent estimates of
how consumer demand for asthma drugs responds to price increases. The
article finds that among all users of asthma drugs, a doubling of
copayments for asthma drugs reduced drug use by 32 percent. Among
chronic asthma sufferers, use of asthma drugs decreased only 22
percent. To the extent that asthmatics are more willing to reduce their
use of maintenance drugs, such as steroid inhalers, than to reduce
their use of rescue drugs, such as albuterol MDIs, the true consumer
response to albuterol MDI price increases may be less than the Goldman
article suggests.
We acknowledge the potential shortcomings of applying estimates
from the Goldman article to the market for albuterol MDIs but, lacking
better information upon which to base our estimates, focus on the range
of elasticity estimates from -.05 to -.15, the same range focused upon
in the proposed rule.
(Comment 52) Several comments sought to place our analysis of
impacts in proper historical context by suggesting that the reductions
in use that we estimate are small compared with historical variations.
One comment noted that introduction of generic albuterol MDIs to the
market for albuterol MDIs in the mid-1990s, and the associated decline
in prices, was not associated with any decrease in asthma morbidity.
A second comment noted that the introduction of cheaper generic
albuterol MDIs did not result in an increase in consumption of
albuterol MDIs, implying that removal of generic albuterol MDIs should
not result in a decrease in consumption.
A third comment pointed out that the introduction of generic
albuterol MDIs to the market coincided roughly with the entry of
therapeutic alternatives such as salmeterol xinafoate, ipatropium
bromide, fluticasone propionate, and COMBIVENT, which would have
decreased demand for albuterol MDIs at the time lower priced generics
became available.
A fourth comment noted that year-to-year fluctuations in demand for
albuterol MDIs exceed 1 million units, implying that estimated
decreases in albuterol demand are small relative to the market.
We believe it is difficult to draw conclusions about the future
albuterol MDI market based on characteristics of the market from the
1990s. Our projected decrease in albuterol MDI sales assumes that,
apart from price increases, other determinants of albuterol demand are
held constant. In the mid-1990s, several factors that influence
albuterol MDI demand changed including the prevalence and incidence of
asthma and COPD and patterns of medical practice. However, the effects
of these changes cannot easily be estimated with existing data. For
example, changes in asthma prevalence before and after 1997 are
complicated by changes in the design of the National Health Interview
Survey in 1997. We believe the comment stating that introduction of new
asthma drugs at this time decreased demand for albuterol MDIs is
probably correct, but we lack the data needed to quantify any decrease
in demand caused by introduction of new asthma drugs. Because important
determinants of albuterol MDI demand are not held constant, the lack of
a clear relationship between aggregate albuterol MDI sales and average
prices in the 1990s does not undermine the projection that, all other
factors remaining the same, use of albuterol MDIs will fall as prices
rise.
We agree that a reduction in albuterol MDI use of several hundred
thousand annually is a small percentage of the total number of
albuterol MDIs used in the United States.

I. Other Comments

(Comment 53) Speakers at the PADAC meeting and written comments
said albuterol MDIs were overused and the phaseout of albuterol CFC
MDIs would be an appropriate time for physicians and patients to
reevaluate the patients' use of asthma medication. The reevaluation
would optimize drug regimens used by asthma patients by emphasizing use
of maintenance drugs and deemphasizing the use of albuterol MDIs as a
rescue medication. One comment suggested we incorporate strategies to
encourage these interchanges into this final rule. Another written
comment disagreed with these comments, and asserted that the
elimination of the essential-use designation for albuterol MDIs should
not be viewed as a teachable moment and it would be inappropriate to
force patients to use other longer acting but more expensive drugs by
effectively raising the price of albuterol MDIs.
While recognizing that many experts believe that albuterol MDIs are
being overused, we do not have any reliable data that show that there
is a significant pattern of overuse. In any case, the overuse or
underuse of a drug product is not a factor that we consider under Sec.
2.125(g). We do, however, welcome any opportunity for physicians and
patients to reexamine the patients' drug use and to try to optimize the
patients' treatment regimens. It is also important to remember that we
do not regulate the practice of medicine and, depending on how the
strategies are expressed, an effort on our part to incorporate into our
regulation strategies to encourage these consultations might be
construed as the regulation of the practice of medicine.
(Comment 54) A comment from an industry organization stated that
educating patients and health care providers about the transition from
albuterol CFC MDIs to albuterol HFA MDIs is very important, and offered
to participate in cooperative education programs with FDA and other
interested parties. GSK has outlined their education plans in their
comments.

[[Page 17182]]

Other comments stated the importance of transition education.
We agree that educating patients and health care providers about
the transition is very important. Anyone who wishes to discuss a
cooperative educational effort with HHS and FDA should contact FDA or
the Office of the Secretary of HHS.
(Comment 55) One comment recommended that, in setting an effective
date, we take into consideration the time necessary to educate patients
and health care providers about the transition to albuterol HFA MDIs,
and one comment recommended more time for this education.
We believe that educating patients and health care providers about
the transition to albuterol HFA MDIs is very important. From most
patients' perspective, albuterol HFA MDIs are essentially identical\11\
to the albuterol CFC MDIs they will be replacing. An explanation that
an albuterol HFA MDI is being substituted for the albuterol CFC MDI the
patient had been receiving and a explanation of the differences in
using the new MDI should be adequate for the vast majority of patients.
This explanation can be given by the patient's physician, pharmacist,
or other health care provider. While we realize it will take some time
to prepare and distribute educational material, we believe that
adequate education can easily be provided before the final transition
to albuterol HFA MDIs.
---------------------------------------------------------------------------

\11\ While PROVENTIL HFA and VENTOLIN HFA can be substituted for
albuterol CFC MDIs, they are not therapeutic equivalents to
albuterol CFC MDIs, or to each other, as that term is defined in the
Orange Book. There are minor differences between the formulations of
VENTOLIN HFA and PROVENTIL HFA that might be significant for some
small patient subpopulations (see our response to comment 28 of this
document), but for the vast majority of patients these differences
should not be significant.
---------------------------------------------------------------------------

(Comment 56) One comment asserted that ``a premature phaseout would
compromise the reward structure for innovation.'' The comment also
asserted that firms that had made substantial investments in developing
albuterol HFA MDIs would be adequately rewarded for the innovation even
if this rule were made effective at a date that would allow generic
albuterol HFA MDIs to enter the market before the removal of the
essential-use designation for albuterol MDIs. The comment stated that
GSK had profited handsomely from sales of its combination fluticasone
and salmeterol DPI products in the United States and abroad.
We do not see, nor does the comment explain, how profits from the
sale of combination fluticasone and salmeterol DPIs could be seen as a
reward for GSK's albuterol HFA MDI research and development. Even if we
assume that GSK's sales of other products somehow provide adequate
incentives for its innovation, the comment does not assert how the
research and development efforts of 3M, the manufacturer of the first
albuterol HFA MDI marketed in the United States, have been rewarded.
The development of ozone-friendly products is important to
achieving the goal of protection of the Earth's ozone layer.
Accordingly, it is a factor we considered in our analyses of impacts
(see 69 FR 33602 at 33614-33615 and section V of this document).
(Comment 57) One comment emphasized the importance of encouraging
the development of ozone-friendly products and stated that, in
consideration of the pharmaceutical firms developing ODS free
alternatives, the U.S. Government had committed itself ``to ensure
prompt removal of nonessential CFC MDIs as soon as new and reformulated
products became available.''
As we said previously in this document, the development of ozone-
friendly products is important to achieving the goal of protection of
the Earth's ozone layer. However, we are unaware of the commitment
described in this comment. The 2002 final rule and this rulemaking have
been undertaken under our obligations under the Clean Air Act and the
Montreal Protocol.
(Comment 58) A few comments expressed unfavorable opinions on
salmeterol DPIs and combination fluticasone and salmeterol DPIs.
Another comment complained about the high prices of levalbuterol
hydrochloride (HCl) inhalation solution.
We have not considered salmeterol DPIs, combination fluticasone and
salmeterol DPIs, or levalbuterol HCl inhalation solution to be
alternatives to albuterol CFC MDIs. Comments about salmeterol DPIs,
combination fluticasone and salmeterol DPIs, and levalbuterol HCl
inhalation solution are not relevant to this rulemaking.

IV. Environmental Impact

We have carefully considered the potential environmental effects of
this action. We have 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 finding of no
significant impact, and the evidence supporting that finding, contained
in an environmental assessment, may be seen in the Division of Dockets
Management (see ADDRESSES) between 9 a.m. and 4 p.m., Monday through
Friday.

V. Analysis of Impacts

A. Introduction

We have examined the impacts of the final rule under Executive
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), the
Unfunded Mandates Reform Act of 1995 (Public Law 104-4), 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). We believe that this final rule is consistent with the
regulatory philosophy and principles identified in the Executive order.
This final rule is considered an economically significant regulatory
action 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. We lack the data to certify that this final rule
will not have a significant economic impact on a substantial number of
small entities. Therefore, we have prepared a Regulatory Flexibility
Analysis.
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 issuing ``any rule that
includes any Federal mandate that may result in the 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.'' The current threshold after adjustment
for inflation is $115 million, using the most current (2003) Implicit
Price Deflator for the Gross Domestic Product. This rule, however, does
not contain such a mandate.
The Congressional Review Act requires that regulations that have
been identified as being major must be submitted to Congress before
taking effect. This rule is major under the Congressional Review Act.
Limitations in the available data prevent us from estimating
quantitatively the anticipated costs and benefits to society, so we
focus instead on proxy measures. The costs of this final rule include
the benefits lost by consumers who would have bought albuterol MDIs at
the current price but are unwilling or unable to buy them at

[[Page 17183]]

a higher price. The price of albuterol MDIs will rise because this
rule, by ending the essential-use designation for albuterol MDIs, will
effectively remove less expensive generic versions of albuterol MDIs
from the market. Consumers and third-party payers, including Federal
and State Governments, will spend more for albuterol MDIs as a result
of the price increase. But this increased spending is not part of
social cost as conventionally defined, because it represents resources
that are transferred from drug buyers (consumers and third-party
payers) to drug sellers (drug manufacturers, wholesalers, pharmacies,
etc.). The benefits of this rule include the value of improvements in
the environment and public health that may result from reduced
emissions of ODSs (for example, the reduced future incidence of skin
cancers and cataracts). The benefits also include improved expected
returns on investments in environmental technologies and greater
international cooperation to comply with the Montreal Protocol. As we
are unable to estimate the costs and benefits in dollar terms, we
instead focus on the cumulative number of albuterol MDIs that might not
be sold and the changes in CFC emissions as a result of the rule.
As a result of this rule, approximately 96 million to 430 million
albuterol CFC MDIs will be removed from the market, depending on
whether generic albuterol MDIs become available in 2010 or 2017. If
generic albuterol HFA MDIs enter the market at the end of 2010 (when
one of the earlier listed patents for albuterol HFA MDIs expires) then
96 million albuterol CFC MDIs would have been sold between the
effective date of this rule (December 31, 2008) and the end of 2010,
without the rule. If generic albuterol HFA MDIs enter the market at the
end of 2017 (when the last listed patent for albuterol HFA MDIs
expires)\12\ 430 million albuterol CFC MDIs would otherwise have been
sold between the effective date of this rule, and December 2017,
without the rule. After generic albuterol HFA MDIs enter the albuterol
MDI market and competition among albuterol HFA MDI producers determines
the price, there would be no rationale related to patient access to
albuterol MDIs for maintaining an essential-use designation for ODSs
for albuterol.
---------------------------------------------------------------------------

\12\ Since publication of the 2004 proposed rule, two patents
that expire in 2017 have been listed in the Orange Book for VENTOLIN
HFA.
---------------------------------------------------------------------------

Assuming generic albuterol HFA MDIs enter the market at the end of
2010, the removal of albuterol CFC MDIs will eliminate competition from
low-cost generic drugs during the period between December 2008 and
December 2010, thereby raising prices and increasing spending on
albuterol MDIs by about $2.1 billion, assuming a 3-percent discount
rate, or $1.7 billion, assuming a 7-percent discount rate (present
value in 2005).
Assuming generic albuterol HFA MDIs enter the market at the end of
2017, the removal of albuterol CFC MDIs will eliminate competition from
low-cost generic drugs during the period between December 2008 and
December 2017, thereby raising prices and increasing spending on
albuterol MDIs by about $8.3 billion, assuming a 3-percent discount
rate, or $6.2 billion, assuming a 7-percent discount rate (present
value in 2005).
Taking into account GSK's commitment to provide free samples and
coupons, we estimate that higher prices due to the elimination of
generic competition will reduce the number of albuterol MDIs sold by
between 300,000 and 900,000 per year. This will induce U.S. consumers
to use between 600,000 and 1.8 million fewer albuterol MDIs between the
removal of albuterol CFC MDIs on December 31, 2008, and December 2010,
or to use 2.7 million and 8.1 million fewer albuterol MDIs during the
years between December 31, 2008, and December 2017. These estimates do
not take into account the GSK and Schering patient assistance programs
designed to provide free or low cost drugs to low-income patients.
Should generic albuterol MDIs become available at the end of 2010,
consumers will substitute 96 million albuterol HFA MDIs for albuterol
CFC MDIs between 2008 and December 2010, reducing atmospheric CFC
emissions by 2,400 tons in total. If generic albuterol MDIs become
available at the end of 2017, substitution of albuterol HFA MDIs for
the 430 million albuterol CFC MDIs that would have been consumed
between 2008 and December 2017 will reduce atmospheric emissions of
CFCs by about 10,800 tons in total. These quantitative estimates of the
effects of this rule are summarized in tables 1 and 2 of this document.

Table 1.--Summary of Quantifiable Effects of the Final Rule Relative to HFA Patent Expiration in 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased Expenditures for Albuterol MDIs
Present Value in 2005 (billions) Possible Reduction in Reduced Aggregate
Number of Affected Albuterol MDIs (millions) -------------------------------------------------- MDI Use (millions) Emissions Related to
3-percent discount rate 7-percent discount rate Phaseout (metric tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
96 million $2.1 $1.7 0.6 to 1.8 2,400
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 2.--Summary of Quantifiable Effects of the Final Rule Relative to HFA Patent Expiration in 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased Expenditures for Albuterol MDIs
Present Value in 2005 (billions) Possible Reduction in Reduced Aggregate
Number of CFC Albuterol MDIs Removed From the Market -------------------------------------------------- MDI Use (millions) Emissions Related to
3-percent discount rate 7-percent discount rate Phaseout (metric tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
430 million $8.3 $6.2 2.7 to 8.1 10,800
--------------------------------------------------------------------------------------------------------------------------------------------------------

While the agency believes that the benefits of this regulation
justify its costs, we cannot estimate quantitatively the public health
effects of the phaseout. The decreased use of albuterol MDIs may
adversely affect some patients, but we lack an ability to characterize
such effects quantitatively. We also are unable to estimate
quantitatively the reductions in skin cancers, cataracts, and
environmental harm that may result from the reduction in CFC emissions
by 10,800 metric tons during these years.
We state the need for the regulation and its objective in section
V.B of this

[[Page 17184]]

document. Section V.C of this document provides background on CFC
depletion of stratospheric ozone, the Montreal Protocol, the albuterol
MDI market, and the health conditions that albuterol is used to treat.
We analyze the benefits and costs of the rule, including effects on
government outlays, in section V.D of this document. We assess
alternative phaseout dates in section V.E of this document, and conduct
a sensitivity analysis on entry dates of generic competition in section
V.F of this document. We present an analysis of the effects on small
business in a regulatory flexibility analysis in section V.G of this
document. We discuss our conclusions in section V.H of this document.

B. Need for Regulation and the Objective of this Rule

This regulation is necessary because private markets are very
unlikely to preserve levels of stratospheric ozone sufficient to
protect the public health. Individual users of albuterol MDIs have no
significant private incentive to switch to non-ozone depleting
albuterol HFA MDIs. In fact, each user would bear all of the costs and
virtually none of the benefits of such a switch, as the environmental
and health benefits would tend to be distributed globally and occur
decades in the future. Thus, the outcome of a private market would be
continued use of the albuterol MDI available at the lowest price, even
if the social value of reducing emissions were clearly much greater
than the price premium for non-ozone depleting albuterol HFA MDIs.
The objective of this final rule is to reduce atmospheric emissions
of ODSs, specifically CFCs. CFCs and other ODSs deplete the
stratospheric ozone that protects the Earth from ultraviolet solar
radiation. We are ending the essential-use designation for ODSs used in
albuterol MDIs because two acceptable ODS-free albuterol formulations
have been successfully marketed in the United States for more than 2
years. Removing this essential-use designation will comply with
obligations under the Montreal Protocol and the Clean Air Act, thereby
reducing emissions that deplete stratospheric ozone, while preserving
access to essential drugs by minimizing adverse effects on affected
patient populations.

C. Background

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 other 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's surface.
Because of this, environmental scientists from the United States and
other countries advocated ending all uses of these chemicals.
2. The Montreal Protocol
The international effort to craft a coordinated response to the
global environmental problem of stratospheric ozone depletion
culminated in the Montreal Protocol, an international agreement to
regulate and reduce production of ODSs. The Montreal Protocol is
described in section III.B of this document. One hundred and eighty-six
countries have now ratified the Montreal Protocol, and the overall
usage of CFCs has been dramatically reduced. In 1986, global
consumption of CFCs totaled about 1.1 million metric tons annually, and
by 2000, total annual consumption had been reduced to fewer than 0.1
million metric tons (Ref. 5). This decline amounts to about a 90-
percent decrease in consumption and is a key measure of the success of
the Montreal Protocol. Within the United States, consumption of ODSs,
and CFCs in particular, has fallen sharply--consumption of CFC-11 and
CFC-12 is about 20 percent of 1990 consumption.\13\
---------------------------------------------------------------------------

\13\ The ozone depleting potentials of CFC-11 and CFC-12 are
equal. See http://www.epa.gov/ozone/ods.html.
---------------------------------------------------------------------------

A relevant aspect of the Montreal Protocol is that production of
CFCs in any year by any country is banned after the phase-out date
unless the Parties to the Montreal Protocol agree to designate the use
as ``essential'' and approve a quantity of new production for that use.
Each year, each Party nominates the amount of CFCs needed for each
essential use and provides the reason why such use is essential.
Agreement on both the essentiality and the amount of CFCs needed for
each nominated use has been reached by consensus at the annual Meeting
of the Parties.
3. Benefits of the Montreal Protocol
EPA has generated a series of estimates of the environmental and
public health benefits of the Montreal Protocol (Ref. 6). The benefits
include reductions of hundreds of millions of nonfatal skin cancers, 6
million fewer fatalities due to skin cancer, and 27.5 million cataracts
avoided between 1990 and 2165 if the Montreal Protocol were fully
implemented. EPA estimates the value of these and related benefits to
equal $4.3 trillion in present value when discounted at 2 percent over
the period of 175 years. This amount is equivalent to about $6 trillion
after adjusting for inflation between 1990 and 2004. This estimate
includes all benefits of total global ODS emission reductions expected
from the Montreal Protocol and is based on reductions from a baseline
scenario in which ODS emissions would continue to grow for decades but
for the Montreal Protocol.
4. Characteristics of COPD
Albuterol MDIs are used to treat COPD. 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 (for example, chronic
coughing, expectoration, and wheezing). COPD is generally associated
with cigarette smoking and is extremely rare in persons younger than
25.
According to the Centers for Disease Control (CDC), an estimated 10
million U.S. adults carried the diagnosis of COPD in 2000 (Ref. 7).
Because the underlying surveys depend on patient-reported diagnoses and
many affected individuals have not been formally diagnosed, the
National Health Interview Survey (NHIS) suggests that as many as 24
million Americans may actually be affected by the disease. The
proportion of the U.S. population with mild or moderate COPD has
declined over the last quarter century, although the rate of COPD in
females increased relative to males between 1980 and 2000. The most
effective intervention in modifying the course of COPD is smoking
cessation. Symptoms such as coughing, wheezing, and sputum production
are treated with medication.
5. Characteristics of Asthma
Albuterol MDIs are also used to treat asthma, 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 17185]]

According to the 2002 NHIS, approximately 20 million patients in
the United States reported they had asthma (Ref. 8). The prevalence of
asthma decreases with age, with the prevalence being 92 per 1,000
children ages 0-17 (6.1 million children) compared to 83 per 1,000
among adults ages 18-44 (7.4 million), 71 per 1,000 among adults ages
45-64 (4.6 million), and 59 per 1,000 among adults age 65 and over (1.9
million) (Ref. 8).
The NHIS reported that during 2002, about 12 million patients
reported experiencing an asthma attack during the previous year (Ref.
8, table 10). According to the National Ambulatory Medical Care Survey,
in 2001 there were 1.3 million outpatient asthma visits to physician
offices and hospital clinics and 1.9 million emergency room visits
(Ref. 8, table 16). According to the National Center for Health
Statistics, there were 454,000 hospital admissions for asthma in 2001
(Ref. 8, table 12), and 4,269 mortalities (Ref. 8, table 1). The
estimated direct medical cost of asthma (hospital services, physician
care, and medications) was $9.4 billion (Ref. 8, table 17).
While the prevalence of asthma has been increasing in recent years,
CDC reports that the incidence of asthma (or the rate of new diagnoses)
has remained fairly constant since 1997 (Ref. 9). Non-Hispanic blacks,
children under 17 years old, and females have higher incidence rates
than the general population and also have higher attack prevalence. The
CDC notes that although numeric increases have occurred in the numbers
and rates of physician office visits, hospital outpatient visits, 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.
6. Current U.S. Albuterol MDI Market
Albuterol is the preferred, and most commonly prescribed, short-
acting relief medication for asthma and is also important in the
treatment of COPD. For reasons of cost, convenience, and effectiveness,
MDIs are the preferred, and most commonly prescribed, route of
administration for albuterol.
We estimate that, in the first two quarters of 2004, U.S. consumers
bought about 22.7 million generic albuterol MDIs through retail
channels. This estimate is based on our analysis of IMS data (Ref. 10).
Total consumption of albuterol MDIs has fluctuated around approximately
50 million MDIs annually over the last several years (Ref. 11). Based
on retail sales, we estimate approximately 96 percent of albuterol MDIs
sold were generic MDIs or branded MDIs relabeled and sold as generic
(Ref. 10) (all containing CFCs), suggesting a total market for generic
albuterol MDIs of approximately 48 million MDIs.
IMS provides data on average retail prices for marketers of
albuterol MDIs for each of three payer types (cash customers, Medicaid
recipients, and patients covered by other third-party payers), and the
proportion of each marketer's sales to each payer type. As described in
table 3 of this document, the weighted average (across all payer types)
of retail prescription price for generic albuterol CFC MDIs during the
first half of 2004 was about $13.50 per MDI, the weighted average
retail prescription price for branded versions of albuterol CFC MDIs
was about $38.90 per MDI, and the weighted average retail prescription
price for albuterol HFA MDIs was about $39.50 per MDI.

Table 3.--Summary of Current Retail Prices for Albuterol CFC and HFA MDIs\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Albuterol CFC MDI Prices Albuterol HFA Price Premium: HFA MDI Price
------------------------------ MDI Prices Relative to Generic Price Estimated
Payer Type Generic Market ------------------------------------------------ Units
Share (percent) Generics Weighted Average Weighted Dollars per (millions)\2\
Branded Products Average MDI Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cash 97.0 $19.13 $45.90 $46.32 $27.19 142 5.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicaid\3\ 97.3 $15.61 $37.10 $41.14 $25.53 164 8.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Third-party 95.4 $12.03 $37.75 $38.60 $26.57 221 31.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Market 96.0 $13.53 $38.87 $39.47 $25.94 192 45.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Source: (Ref. 10)
\2\ These estimates reflect retail sales of generic albuterol MDIs, excluding sales at Internet and mail-order pharmacies.
\3\ Medicaid prices do not reflect rebates given directly to States by drug companies.

We estimate albuterol CFC MDIs are responsible for roughly 1,200
metric tons of CFC emissions annually. Each albuterol CFC MDI contains
about 21 grams of CFCs.\14\ The estimated 48 million albuterol CFC MDIs
sold annually therefore contain about 1,000 metric tons of CFCs. Adding
an additional 20 percent to account for use in production, unusable
batches, and other factors (as manufacturers typically do in the
process of requesting essential-use allocations of CFCs for
manufacturing) brings the total emissions to about 1,200 metric tons.
To the extent that CFCs used in the production process are reclaimed
and destroyed, this estimate overstates expected emissions reductions.
---------------------------------------------------------------------------

\14\ CFC MDI manufacturers disclose the CFC content of their
MDIs to EPA as part of the process of requesting essential-use
allocations; however, the CFC content of any particular MDI is
considered confidential business information and may not be
disclosed without the manufacturer's consent.
---------------------------------------------------------------------------

D. Benefits and Costs of the Final Rule

The benefits and costs of a government action are conventionally
estimated relative to a baseline scenario that in this case is a
description of the production, use, and access to albuterol MDIs in the
absence of this rule. In this section we first describe such a baseline
and then present our analysis of the benefits of the final rule. Next
we turn to the costs of the rule and to an analysis of the effects on
the Medicare and Medicaid programs.
1. Baseline Conditions
We developed baseline estimates of future conditions to estimate
the economic effects of prohibiting marketing of albuterol CFC MDIs
after December 31, 2008. It is standard practice 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.

[[Page 17186]]

For the baseline in this analysis, we assume that access to CFC
propellants, and therefore to albuterol CFC MDIs, continues
indefinitely. This assumption focuses our analysis on the impact of
removing less expensive generic albuterol CFC MDIs from the market,
until the date that competition from generic albuterol HFA MDIs lowers
prices. As stated previously in this document, we have identified
listed patents on the HFA technology with expiration dates of 2009,
2010, 2014, 2015, and December 2017. In performing our analysis, we
make two different sets of assumptions. First, we perform an evaluation
based on the assumption that generic versions of albuterol HFA MDIS
will come on the market after patents expire in 2010. Second, we
perform an evaluation based on the assumption that generic albuterol
HFA MDIs will come on the market after the last listed patent expires
in 2017. Without this rule, U.S. commitments to the Montreal Protocol
could limit future access to CFCs and, therefore, inexpensive generic
albuterol CFC MDIs. This observation suggests an alternative baseline
where Parties to the Montreal Protocol stop approving nominations for
the use of CFCs in albuterol MDIs at a particular date. While the
Parties could theoretically take such action for calendar year 2008, it
would be speculative on our part to assume that they would take such
action for that specific date or any other. As a result, we do not
pursue a quantitative analysis with such alternative baselines.
Throughout our analysis, we assume that future prices for albuterol
CFC and HFA MDIs do not change from current levels. This assumption
overstates prices to the extent that competition from new entrants
reduces future albuterol HFA MDI prices. We assume, however, that
competition among the albuterol HFA MDI manufacturers will leave prices
roughly stable and note that one manufacturer has pledged to freeze
prices until at least the beginning of 2008.
Throughout this analysis, we assume that sufficient inventories of
CFCs are available to meet demand up to December 31, 2008, and that
albuterol HFA MDIs available on and after December 31, 2008, will be
adequate to meet demand. In calculating the present value of increased
expenditures, we discount expected future increases in expenditures by
both 7 percent and 3 percent annually for each year after 2005.
2. Benefits of the Final Rule
The benefits of the final rule include environmental and public
health improvements from protecting stratospheric ozone by reducing CFC
emissions. Benefits also include expectations of increased returns on
investments in environmentally friendly technology, reduced risk of
unexpected disruption of supply of albuterol MDIs, and continued
international cooperation to comply with the spirit of the Montreal
Protocol, thereby potentially reducing future emissions of ODS
throughout the world.
a. Reduced CFC emissions. Market withdrawal of albuterol CFC MDIs
will reduce emissions by approximately 1,200 metric tons of CFCs per
year. We have reviewed current CFC inventories and believe currently
available quantities are likely to be sufficient to supply the
albuterol CFC MDI market for approximately 12 months. Nominations for
new CFC production are generally approved by the Parties to the
Montreal Protocol 2 years in advance. The final rule bans marketing of
albuterol CFCs after December 31, 2008. There is considerable
uncertainty with respect to the amount of inventories that will be
available in the future, but we anticipate that utilization of existing
inventory will allow the United States to avoid requesting a 2008
exemption, or to significantly reduce the amount requested. Therefore,
we estimate the final regulation will reduce CFC use by 1,200 metric
tons per year after the end of 2008, a benefit that will continue
beyond the evaluation period.
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 the equivalent of $6 trillion in current dollars.
However, EPA's report provides no information on the total tons of
reduced emissions or the incremental value per ton of reduced
emissions. EPA derived its benefits estimates from a baseline that
included continued increases in emissions in the absence of the
Montreal Protocol. We have searched for authoritative scientific
research that quantifies the marginal economic benefit of incremental
emission reductions under the Montreal Protocol, but have found none
conducted during the last 10 years. As a result, we are unable to
quantify the environmental and human health benefits of reduced ODS
emissions from this regulation. Such benefits, in any event, were
apparently included in EPA's earlier estimate of benefits.
As a share of total global emissions, the reduction associated with
the elimination of albuterol CFC MDIs represents only a small fraction
of 1 percent. Current allocations of CFCs for albuterol MDIs account
for about 0.1 percent of the total 1986 global consumption of CFCs
(Ref. 5). 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 because that
estimate reflects future emissions growth that has not occurred.
Although the direct benefits of this regulation are small relative
to the overall benefits of the Montreal Protocol, we believe the
reduced exposure to UV-B radiation that will result from these reduced
emissions will help protect public health. However, we are unable to
assess or quantify specific reductions in future skin cancers and
cataracts associated with these reduced emissions.
b. Returns on investment for environmental technology. Establishing
a phaseout date prior to the expiration of patents on albuterol HFA
MDIs not only rewards the developers of the HFA technology, but also
serves as a signal to other potential developers of ozone-safe
technologies. In particular, such a phaseout date would preserve
expectations that the government protects incentives to research and
develop ozone-safe technologies.
Newly developed technologies to avoid ODS emissions have resulted
in more environmentally ``friendly'' air conditioners, refrigerants,
solvents, and propellants, but only after significant investments.
Several manufacturers have claimed development costs that total between
$250 million and $400 million to develop HFA MDIs and new propellant-
free devices for the global market (Ref. 11).
These investments have resulted in several innovative products in
addition to albuterol HFA MDIs. For example, breath-activated delivery
systems, dose counters, dry powder inhalers, and mini-nebulizers have
also been successfully marketed. This technology could also affect
other drugs used for the treatment of asthma and COPD because of the
likelihood that, eventually, CFCs will not be available for any drug
use. To compare the effect of alternative phaseout dates on these
returns to investment, we compare the ratio of the present value of
increased revenues expected to accrue to innovative firms from a
December 31, 2008, phaseout date and the present value of the future
revenue stream of alternative phaseout dates, using both 7 percent and
3 percent annual discount rates. This ratio can provide a basis for
relative assessments of the returns to investors for alternative
phaseout dates. We present estimates of this ratio in a later
discussion of alternatives.

[[Page 17187]]

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 controls have depressed the potential returns to
technological innovation. For example, in 2003, the ex-manufacturer
prices (the prices of the drugs when they leave the production
facilities) of the albuterol HFA MDIs most widely sold in France,
Germany, and the United Kingdom ranged between roughly $3.30 and $6.40;
in the United States these prices were in the neighborhood of $29 to
$30.\15\
---------------------------------------------------------------------------

\15\ Analysis completed by FDA based on information provided by
IMS Health, IMS MIDAS\TM\, United States, Germany, France and the
United Kingdom, 2003.
---------------------------------------------------------------------------

c. International cooperation. The advantages of selecting a date
that maintains international cooperation are substantial because the
Montreal Protocol, like most international environmental treaties,
relies primarily on a system of national self-enforcement, although it
also includes a mechanism to address noncompliance. In addition,
compliance with its directives is subject to differences in national
implementation procedures. Economically less-developed nations, which
have slower phaseout schedules than developed nations, have emphasized
that progress in eliminating ODSs in developing nations is affected by
observed progress by developed nations, such as the United States. If
we had adopted a later phaseout date, other Parties could attempt to
delay their own control measures.
3. Costs of the Final Rule
The effects of the final rule include increased spending for needed
albuterol medication. The social costs of the final rule include the
lost benefits of albuterol use that may result from the price increase.
We discuss the increased spending and then the social costs in turn.
In the absence of this regulation, we would expect 430 million
generic albuterol MDIs to be sold during the entire period between
December 31, 2008, and December 2017, when the last patent listed in
the Orange Book for an albuterol HFA MDI will expire. Of these, 96
million would be sold before 2010, an earlier date when generics might
arrive. These figures are based on the estimate that approximately 96
percent (Ref. 10) of the approximately 50 million albuterol MDIs sold
per year (Ref. 11) are generic, suggesting that about 48 million
generic albuterol MDIs are sold annually.
With this regulation, patients who would have used generic
albuterol CFC MDIs are expected generally to switch to albuterol HFA
MDIs. We estimated in section V.C.6 of this document a weighted average
price difference at retail pharmacies (across all payer types) of about
$26 between these products. If this difference can be applied to future
transactions involving 48 million generic albuterol MDIs annually (less
the 2 million free samples promised by GSK and decreased demand of
300,000 to 900,000 MDIs resulting from price increases--as calculated
later in this analysis), then increased expenditures from consumers and
private or public third-party payers would reach about $1.2 billion per
year. This estimate is based, in part, on estimated increases in
Medicaid prices that do not take into account rebates given directly to
States by drug companies. To the extent that such rebates are larger
for branded albuterol MDIs, which are more expensive, the increased
expenditures are overestimated.
The present value of these increased expenditures in 2005 is about
$6.2 billion using a 7 percent annual discount rate and $8.3 billion
using a 3 percent annual discount rate. In estimating this increased
spending, we focus on the period between December 31, 2008, and
December 2017, when the last patent listed in the Orange Book will
expire. We also ignore the fact that after a VENTOLIN HFA MDI is first
used, it expires much more quickly than a PROVENTIL HFA MDI or
albuterol CFC MDIs. Although this change in the usable life of some
MDIs may affect the quantity consumed, we are unable to quantify the
magnitude of such an effect.
These increased expenditures represent primarily transfers from
consumers and third-party payers, including State and Federal
Governments, to branded pharmaceutical manufacturers; they are,
therefore, not net costs to society. Because these estimates are based
on average retail prices, they include additional spending that will go
to parties other than innovative manufacturers, such as distributors
and retail pharmacies. We estimate that about 11 percent of this
increase--about $130 million annually--may be paid by uninsured
customers ($130 million) (Ref. 10). We derive these estimates assuming
increased spending is the product of the number of albuterol MDIs sold
for cash and the difference between the average price for generic
albuterol MDIs and the simple mean of the prices for albuterol HFA
MDIs. We estimate that 5 million generic albuterol MDIs are sold to
uninsured patients annually and that retail cash prices for albuterol
MDIs will rise by about $27 per MDI (details of these estimates follow
later in this section of the document.) Taking in to account savings
from coupons and free samples, uninsured albuterol users would
therefore spend about $120 million more each year.\16\
---------------------------------------------------------------------------

\16\ (5 million MDIs - 300,000 free sample MDIs) x ($25/MDI) -
(450,000 coupons) x ($10) = $117,500,000. Here, we assume coupons
and free samples reach uninsured albuterol users in proportion to
estimates of the uninsured fraction of the overall population (15
percent).
---------------------------------------------------------------------------

According to MEPS, private nongroup and uninsured individuals used,
on average, 3.3 albuterol prescriptions per year (Ref. 12). Based on
IMS data, we estimate the average albuterol prescription is for 1.2
MDIs (Ref. 10). The average uninsured, or underinsured, albuterol user
would therefore use about 4 MDIs/year. Based on these figures, we
estimate that a population of uninsured albuterol users of about 1.25
million\17\ would pay, on average, $95 more per year for albuterol.\18\
This estimate does not take in to account the reduced use of albuterol
MDIs among the uninsured that may result from higher prices or the
extent to which quicker expiration of some HFA albuterol MDIs, relative
to CFC MDIs, will increase albuterol MDI demand and expenditures. In
the future, some fraction of these cash payers will likely be covered
by Medicare (Ref. 10).
---------------------------------------------------------------------------

\17\ (5 million MDIs) / 4 MDIs per uninsured user = 1.25 million
uninsured users.
\18\ ($117,500,000) / (1.25 million uninsured users) = $94.00
per uninsured user.
---------------------------------------------------------------------------

We expect price increases resulting from market withdrawal of less
expensive generic albuterol MDIs will reduce albuterol use by several
hundred thousand MDIs annually (as explained below), although there is
substantial uncertainty about these estimates. The impact of this
reduction on health outcomes is too uncertain to quantify given
available data. Some patients, however, respond to price increases for
medications for chronic conditions in ways that may adversely affect
their health. A recent article found 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 * * *.
However, the article proceeds to characterize these results as
``not definitive.'' (Ref. 4) This finding

[[Page 17188]]

suggests that increased prices for albuterol may lead to some adverse
public health effects among the populations that would face increased
prices. This evidence is insufficient to permit us to quantify any
adverse public health effects. We use expected reductions in albuterol
MDI purchases as a surrogate measure of the impact.
Our approach to estimating the effects of the rule assumes that the
primary effect of an elimination of albuterol CFC MDIs from the market
would be an increase in the average price of albuterol MDIs. Given the
price increase expected from the elimination of generics and existing
estimates of market responses to price increases, we have projected how
the quantity of albuterol MDIs consumed may decline as a result of this
rule. As in the 2004 proposed rule, we assume that the reduction in the
use of albuterol MDIs attributable to this rule can be calculated as
the product of the sensitivity of use with respect to the price
increase, the baseline use of albuterol MDIs among price--sensitive
patients, and the price increase in percentage terms. We discuss these
in turn.
We have no information about how consumers react to increases in
the price of MDIs per se or to increases in the price of ``rescue''
types of MDIs, such as albuterol, in particular. Economists have
researched the response of consumers to higher insurance copayments for
drugs in general. The results appear to indicate price elasticities 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. 13). Some researchers
have reported estimates of price elasticities as great as -.3 for
asthma drugs (Ref. 4), but the authors report that there is wide
variance based on the availability of over-the-counter substitutes. For
example, for drugs with no over-the-counter substitute--a set that
presumably includes albuterol--the reported price elasticity was
-.15.\19\ We have used price elasticities of between -.05 and -.15 to
estimate the potential effect of price increases on demand. We
recognize that elasticity estimates derived from insurance copayment
studies may not be specifically applicable to the effects of average
retail price increases on uninsured patients' demand for albuterol.
---------------------------------------------------------------------------

\19\ Some patients may view PRIMATENE, an epinephrine MDI
available over the counter, as a substitute for prescription
albuterol MDIs. If this view is widespread, the decline in albuterol
MDI use may be greater than that estimated here. However, insofar as
PRIMATENE is effective in treating asthma, the adverse health
effects would not be greater. We lack data to evaluate patients'
willingness to substitute PRIMATENE for albuterol MDIs.
---------------------------------------------------------------------------

To derive an estimate of the number of albuterol MDIs not sold as a
result of this rule, we need an estimate of the baseline use of
albuterol MDI sales by price-sensitive consumers. From data on retail
sales by payer type from the first half of 2004, we find about 5
million generic albuterol MDIs are sold to uninsured patients annually.
This estimate includes sales to people over age 65 not covered by
Medicaid who we expect will be covered by Medicare in the future, but
it excludes mail order and Internet sales and sales through hospitals
and nursing homes. Alternatively, if uninsured individuals under age 65
use albuterol MDIs in proportion to their share of the population
(roughly 15 percent) (Ref. 14), then roughly 7 million of 46 million
generic albuterol MDIs would be sold to the uninsured (46 million = 48
million generic albuterol MDIs - 2 million free samples).
Finally, to estimate the price increase from this rule, we first
assess IMS data, which indicate that cash payers paid, on average,
$19.10 for generic albuterol MDIs and $46.30 for albuterol HFA MDIs, a
difference that would suggest a price increase of $27.20 per MDI, or
142 percent. However, alternative assumptions about the future market
share of different albuterol HFA MDI manufacturers would result in a
smaller price increase--130 percent. These estimated price differences
faced by cash payers are only a proxy for price differences faced by
uninsured patients, because some people with insurance may pay cash,
and some uninsured patients may buy drugs from mail-order and Internet
pharmacies.
We believe that estimates of the recent price premium for albuterol
HFA MDIs may be a reasonable approximation of the price increase
anticipated from this rule, at least to the extent that patent
protection and the more costly criteria for FDA approval of albuterol
HFA MDIs substantially curb competition. At least one listed patent is
expected to expire in December 2017. While increased competition from
new patented albuterol HFA MDIs may reduce future albuterol HFA MDI
prices, such reduction may be small until generic albuterol MDIs are
reintroduced into the market. Apart from any patents, marketing of new
albuterol HFA MDIs before the patents expire requires FDA approval of a
completed NDA. After the patents expire, FDA can approve generic
albuterol HFA MDIs by the abbreviated new drug application (ANDA)
process. The NDA process is more complicated, expensive, and time
consuming than the ANDA process by which new generic drugs are brought
to market. This NDA requirement constitutes a barrier to entry in the
market that will tend to further limit competition until the patents
expire as compared to markets where generic drugs can be marketed.
Finally, as noted previously in this document, one manufacturer has
also announced a voluntary price freeze on its albuterol HFA MDI until
2008.
We combine different measures of price elasticities (-.05 to -.15),
the size of the uninsured generic albuterol MDI market (5 to 7 million
MDIs), and estimated price increases (130 percent to 140 percent) to
estimate the impact of price increases on use. For example, assuming a
price elasticity of .15 and 6 million generic albuterol MDIs sold to
the uninsured annually, a 130 percent price increase would reduce
demand for albuterol MDIs from the uninsured by about 1.2 million MDIs
annually (6 million x -.15 elasticity x 130 percent price increase =
1,200,000 MDIs). These preliminary estimates do not take into account
offsetting increases in consumption from changes in promotional efforts
already announced by GSK. We also note that the elasticity estimates
are based on relatively small price changes and may not be applicable
to large price changes such as these.
Manufacturers have announced programs to distribute free samples
and coupons to mitigate any adverse effect of higher prices on
utilization. For example, GSK has committed to provide 2 million
albuterol HFA MDIs each year to physician offices in expectation that
they would be distributed to patients in need (2003P-0029/CR1, p. 7).
In addition, GSK has committed to annually providing 3 million coupons
worth $10 each in rebates for VENTOLIN HFA to any patient. Both GSK and
Schering currently operate outreach programs that assist patients to
obtain needed medications, but we are unable to assess how many
albuterol MDI users are currently helped by these programs or how many
more would be helped in the future.
Free samples and coupons help mitigate adverse impacts on uninsured
patients only to the extent that they are distributed to physicians and
other health care professionals who then give them to uninsured
individuals.\20\ To assess how free samples and coupons might affect
albuterol MDI use, we conducted a thorough review of the relevant peer-
reviewed literature and

[[Page 17189]]

found two pertinent articles. One found that, while 54 percent of the
free samples were actually distributed to patients, only 9 percent of
the patients who received free samples were uninsured (Ref. 15). These
data suggest that 4.8 percent of the free samples were actually
distributed to uninsured patients. Assuming this estimate is applicable
to the albuterol HFA MDIs distributed by the GSK program, then about
96,000 albuterol HFA MDIs per year would reach the uninsured. The
second article estimated that 71 percent of free samples were given to
patients (Ref. 16). As an upper bound, assuming all samples are
distributed to patients and that the uninsured receive them in
proportion to their share of the population, approximately 300,000 MDIs
(15 percent of 2 million) would reach the uninsured each year.
---------------------------------------------------------------------------

\20\ We found no information addressing how pharmaceutical
companies distribute free samples among physicians and clinics, but
assume that GSK will not systematically channel free samples away
from low-income areas.
---------------------------------------------------------------------------

We expect coupons will do relatively little to improve access to
albuterol among the uninsured. If 150,000 (5 percent (Ref. 15)) to
450,000 (15 percent) of the 3 million coupons reach uninsured patients
each year and 100 percent of them are redeemed, this would increase
albuterol MDI consumption by roughly 2,000 to 15,000 MDIs per year,
based on the range of price elasticities considered.
Taking into account the offsetting effect of free samples and
coupons, we focus on a range of 300,000 to 900,000 fewer albuterol MDIs
sold each year as a result of increased prices stemming from removal of
generic albuterol MDIs from the market. This assessment does not take
into account Schering's and GSK's patient assistance programs designed
to provide free or low cost drugs to low-income patients as we are
unable to assess how many albuterol MDI users are currently helped by
these programs or how many more would be helped in the future. Over the
course of the evaluation period, this would equal between 2.7 million
and 8.1 million fewer albuterol MDIs sold. We recognize that due to
varying measures of the size of the generic albuterol MDI market for
the uninsured, uncertainty about the magnitude of price increases,
consumers' response, and the impact of free samples and coupons, and
other factors, the true impact of the rule could fall outside this
range.
4. Effects on Medicare and Medicaid
In order to apportion the possible spending increases described
previously in this document to the Medicaid and Medicare programs, FDA
and the Centers for Medicare & Medicaid Services (CMS) have analyzed
utilization data related to Medicaid and Medicare, as well as Medicaid
program spending data. As explained in this section of the document,
these data suggest that, were this rule in effect in 2003, Medicaid
spending (including spending by States) would have increased by
approximately $100 million for that year. In addition (based on 2001
utilization and 2004 prices), it would have increased drug spending on
Medicare beneficiaries by roughly $240 million, although this estimate
includes copayments and coinsurance paid by individuals and may be too
low because the estimate does not take into account increases in
utilization associated with the increase in insurance coverage. These
data yield the very rough estimate that the rule would increase
Medicare and Medicaid spending by $340 million annually relative to a
situation where access to generic albuterol CFC MDIs continued.
a. Medicaid. Medicaid spending on albuterol MDIs would have been
higher by roughly $100 million in 2003--after taking into account
rebates from drug companies--if albuterol CFC MDIs were not available.
CMS estimates that 58 percent of this amount would be paid by the
Federal Government and 42 percent by States.
Deriving this cost estimate required making some adjustments to
available data. Our point of departure is the State Drug Utilization
Data, available at http://www.cms.hhs.gov/medicaid/drugs/drug5.asp for
2003. These data on utilization and spending on drugs paid for by the
Medicaid program suggest that State reimbursements under Medicaid would
have been approximately $127 million higher in 2003 if no albuterol CFC
MDIs were available (that is, if only albuterol HFA MDIs were
available). This estimate assumes substitutes for all albuterol CFC
MDIs were purchased at the weighted average price of albuterol HFA
MDIs. However, it does not take into account the effect of the rebates
from drug companies to States and the Federal Government. CMS estimates
that Medicaid program rebates constitute roughly 20 percent of gross
spending on prescription drugs under the Medicaid program, suggesting
that Medicaid spending on albuterol MDIs after rebates would have been
roughly $100 million higher in 2003 if albuterol CFC MDIs were not
available. It is important to note that this is a rough estimate, as
rebates for a specific drug may differ from the 20 percent estimate.
Incomplete data for 2004 suggest that comparable estimates for 2004 are
higher but we believe that these are not reliable because of the
incompleteness of the data.
b. Medicare. Our analysis of the impacts of this rule on Medicare
addresses: (1) The total utilization of albuterol MDIs, (2) the likely
price increase, and (3) the aggregate spending increase.
CMS estimates that noninstitutionalized Medicare beneficiaries not
eligible for Medicaid drug coverage filled about 8 million
prescriptions for albuterol MDIs (including VENTOLIN and PROVENTIL) in
2001, based on the Medicare Current Beneficiary Survey (MCBS) and with
an adjustment for under-reporting for aggregate analysis purposes. As
noted in this section of the document, this estimate is based on
Medicare beneficiaries' self-reported outpatient prescription drug
utilization, including prescriptions filled at both retail and mail
order pharmacies. In addition, the adjustment for underreporting is
normally used for aggregate use or spending data in MCBS and may not
necessarily reflect actual underreporting for albuterol.
This analysis used data from the 2001 MCBS, a continuous,
multipurpose survey of a nationally representative sample of Medicare
beneficiaries. The survey is focused on health care use, cost, and
sources of payment. No ``paid claims'' data on use of albuterol MDIs
exist because Medicare will pay for albuterol MDIs only after the
implementation of the new Medicare outpatient prescription drug benefit
in January 2006. MCBS is the largest nationally representative set of
data available on prescription drug utilization and spending by
Medicare beneficiaries. The MCBS data have been used by both CMS's
Office of the Actuary and the Congressional Budget Office to prepare
estimates related to the new Medicare prescription drug benefit.
However, because the data are self-reported, there are considerable
limitations, most notably underreporting. CMS has studied the
underreporting in the survey and has developed methods to adjust the
data. For purposes of the estimates done for the Medicare drug benefit,
the data on drug spending are analyzed in the aggregate (that is, for
large collections of drugs). Estimates of individual drug product
utilization and spending, however, may be even more vulnerable to the
limitations inherent in self-reported utilization data.
A reliable assessment of impacts must avoid double counting of
people who are eligible for both Medicaid and Medicare. With the
implementation of the new Medicare prescription drug benefit, payment
for outpatient prescription drugs on behalf of

[[Page 17190]]

Medicare beneficiaries who are also eligible for prescription drug
benefits under Medicaid will be moved from the Medicaid program to the
Medicare program. For purposes of this analysis, this population of
dually eligible beneficiaries (that is, Medicare beneficiaries also
eligible for full-benefits under Medicaid) is excluded from the
analysis of the MCBS data, since their albuterol MDI utilization is
captured within the Medicaid data. Approximately half of total Medicaid
prescription drug spending is for this dually eligible population.
However, the proportion will vary based on the type of drug involved.
It is worth noting that albuterol MDIs are used to treat asthma in both
the aged and disabled in the Medicare/Medicaid dually eligible
population, as well as to treat asthma in children, who make up a large
share of Medicaid beneficiaries.
For purposes of this analysis, we assess only data for the time
periods for which data are available and we do not make projections for
future years. As was noted in the impact analysis for the proposed rule
on the Medicare prescription drug benefit (69 FR 46632, August 3,
2004), there is considerable uncertainty in making estimates when there
is no program experience from prior years. This uncertainty is
exacerbated in the context of making estimates related to a particular
drug. For example, in the context of preparing aggregate estimates for
the Medicare drug benefit, CMS makes assumptions about how increased
coverage induces greater utilization and, based on the National Health
Expenditures, projects growth in per capita drug spending. But making
such calculations for a specific individual drug would be difficult and
not likely reliable. Furthermore, in the case of albuterol MDIs, the
drug is subject to large annual fluctuations in demand per user and
size of population using the drug due to the nature of the conditions
being treated, such as asthma where acute episodes may vary by
environmental factors (for example, allergies), prevalence of
infectious diseases (for example, colds), and seasonal weather
conditions (for example, temperature-related bronchial conditions). In
addition, analyzing the effect on Medicare of a change related to one
drug is further complicated, for example, by the need to consider the
interactions with beneficiary cost-sharing in the context of the
Medicare drug benefit design and the availability of additional low-
income subsidies for certain populations. Also, the introduction of an
albuterol HFA MDI from IVAX is expected to increase competition in the
market to some extent, potentially dampening anticipated price
increases in part. Our estimates, therefore, apply only to past years.
We believe that prices paid by private insurers offer a potentially
reasonable approximation of prices negotiated in the context of a
privately administered risk-based insurance program such as the new
Medicare Part D drug plans. Using proprietary data from IMS Health, we
determined that prices for patients with third-party insurance were on
average about $30 more per prescription for albuterol HFA MDIs than for
albuterol CFC MDIs, according to IMS's National Prescription Audit for
the first half of 2004 (Ref. 10). This price estimate reflects
transactions in U.S. retail pharmacies, excluding Internet and mail-
order sales. It also reflects both payments by insurers and copayments
or coinsurance payments by patients. We calculate the average price per
prescription for the albuterol HFA MDIs and the albuterol CFC MDIs,
respectively, as the weighted average of the price per prescription of
different firms' products, where the weights are the firms' shares of
the total albuterol MDIs sold. Price differences per prescription are
larger than price differences per MDI, because some prescriptions are
for more than one MDI.
Given this estimate of the price difference that would have existed
without CFC albuterol MDIs, spending by, and on behalf of, Medicare
beneficiaries without Medicaid drug coverage could have been roughly
$240 million more in order to fill the 8 million prescriptions
estimated to have been filled in 2001 (based on the MCBS data). This
estimate is quite approximate because it relies on an estimate of
albuterol MDI prescriptions from 2001 and estimates of prescription
price differences from the first half of 2004. In addition, albuterol
MDI use may grow as the Medicare drug benefit reduces the cost to
individuals of using albuterol MDIs.

E. Alternative Phaseout Dates

In developing this rule, we considered removing the essential-use
designation for ODSs in albuterol MDIs for different dates between 12
months after issuance of a final rule and December 31, 2009. As shown
previously in this document, earlier removal would increase consumer
expenditures while increasing environmental benefits. A later date
would reduce the potential health effect from reduced access, but also
reduce the environmental benefit and potentially put at risk
international cooperation. We also considered and rejected small
business exemptions as inconsistent with international commitments.
Table 4 of this document shows the effects of selecting December
31, 2005, as the effective date, and Table 5 of this document shows the
effects if we had selected December 31, 2009 (assuming continued
availability of CFCs).

Table 4.--Effects of Phaseout as of December 31, 2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased Expenditures for Albuterol Relative Return on Investment to New
MDIs Present Value in 2005 Possible Reduced Aggregate Technology (return for 12/31/08
Number ofAffected of Albuterol MDIs (billions) Reduction CFC EmissionsRelated phaseout = 1)
(millions) -------------------------------------- inMDI Use to Phaseout (metric -------------------------------------
3-percent 7-percent (millions) tons) 3-percent 7-percent
discount rate discount rate discount rate discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
576 $11.6 $9.3 3.6 to 9.8 14,400 1.4 1.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 17191]]

Table 5.--Effects of Phaseout as of December 31, 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased Expenditures for Albuterol Relative Return on Investment to New
MDIs Present Value in 2005 Possible Reduced Aggregate Technology (return for 12/31/08
Number ofAffected Albuterol MDIs (billions) Reduction CFC EmissionsRelated phaseout = 1)
(millions) -------------------------------------- inAlbuterol to Phaseout (metric -------------------------------------
3-percent 7-percent MDI Use tons) 3-percent 7-percent
discount rate discount rate (millions) discount rate discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
384 $7.3 $5.3 2.4 to 7.2 8,400 .88 .85
--------------------------------------------------------------------------------------------------------------------------------------------------------

F. Sensitivity Analyses

We have conducted a sensitivity analysis to address how key sources
of uncertainty may affect our estimates. Our key focus is the effect of
alternative dates when generic competition for albuterol HFA MDIs may
begin.
In Table 6 of this document, we present estimates assuming that
generic competition arrives in 2015.

Table 6.--Effects of Phaseout on December 31, 2008--Assuming Generic Entry in 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased Expenditures for Albuterol Relative Return on Investment to New
Present Value in 2005 (billions) Technology (return for 12/31/08
-------------------------------------- Possible Reduced Aggregate phaseout with genetic entry in 2017
Number ofAffected Albuterol MDIs Reduction Emissions Related to = 1)
(millions) 3-percent 7-percent inMDI Use Phaseout (metric -------------------------------------
discount rate discount rate (millions) tons) 3-percent 7-percent
discount rate discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
336 $6.7 $5.2 2.1 to 5.6 8,400 .81 .84
--------------------------------------------------------------------------------------------------------------------------------------------------------

This analysis suggests that the eventual date that generic
competition arrives will have a substantial effect on the total
reduction in albuterol MDI use and the aggregate reductions in CFC
emissions. Further analysis of the arrival of generic competition would
require an evaluation of the legal merits of the different patents, but
such an evaluation is beyond the expertise of FDA.

G. Small Business Impact

Current HHS guidance (Ref. 17) suggests that a 3 to 5 percent
impact on total costs or revenues of small entities could constitute a
significant regulatory impact. We lack the data to certify that this
final rule will not have a significant economic impact on a substantial
number of small entities. Therefore, this analysis, together with other
relevant sections of this document, serves as FDA's Regulatory
Flexibility Analysis, as required under the Regulatory Flexibility Act.
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 rule on generic manufacturers is the lost
revenues currently 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.
The Small Business Administration (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.
However, the agency does not have revenue information specific to the
affected entities. According to retail sales in the first half of 2004,
of the 22.7 million generic or relabeled annual prescriptions for
albuterol, approximately 63 percent (14.3 million MDIs) were
distributed by Schering, a large firm, under the Warrick label. Six
different companies marketed the other 8.4 million albuterol MDIs, with
three companies accounting for over 99 percent of these 8.4 million
(Ref. 10). According to data collected by the Congressional Budget
Office (Ref. 18), the value of shipments from manufacturers of generic
drug products accounts for approximately 35 percent of the retail price
of the product. If so, revenue from 1.7 million albuterol MDIs would
approximate $8.0 million per year (1.7 million prescriptions X $13.50
per generic prescription X 35 percent). Because we lack company-
specific revenue data, we are unable to estimate the impact of this
rule on these small entities. To the extent that generic albuterol HFA
MDIs might become available prior to the removal of the essential-use
designation, any impact on small entities would be mitigated.
2. 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. During the proposal stage of this rulemaking, we specifically
solicited comments on the impact on small entities. No comments were
received that explicitly addressed this issue.

H. Conclusion

This final rule could result in increased health care expenditures
of about $1.2 billion for each year between the removal of the
essential-use designation and reintroduction of generic competition at
patent expiration. Taking into account GSK's commitment to provide free
samples and coupons, we estimate that higher prices due to the
elimination of generic competition will reduce the number of MDIs sold
by between 300,000 and

[[Page 17192]]

900,000 per year. This estimate does not take into account Schering's
and GSK's patient assistance programs designed to provide free or low
cost drugs to low-income patients as we are unable to assess how many
albuterol MDI users are currently helped by these programs or how many
more would be helped in the future. In addition, each year without
using CFCs in albuterol MDIs will reduce atmospheric emissions of ODSs
by 1,200 metric tons and provide increased investment returns for
environmentally friendly technology that may induce further gains.
Removal of the essential-use designation is consistent with FDA's role
in determining the essentiality of MDIs under section 601 of the Clean
Air Act, and also meets U.S. obligations under international
agreements. Finally, we lack the data to certify that this final rule
will not have a significant economic impact on a substantial number of
small entities.

VI. The Paperwork Reduction Act of 1995

This final rule contains no collections of information. Therefore,
clearance by the Office of Management and Budget under the Paperwork
Reduction Act of 1995 is not required.

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. While this rule may result in States
increasing spending for albuterol MDIs in programs such as Medicaid,
the increased spending is not a substantial direct compliance cost, as
the term is used in Executive Order 13132. 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. 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. U.S. Food and Drug Administration, ``Guidance for Industry:
Integration of Dose-Counting Mechanisms into MDI Drug Products,''
March 2003.
2. Penick, T. B. et al., ``Accuracy of Float Testing for
Metered-Dose Inhaler Canisters,'' Journal of the American
Pharmaceutical Association, 42:582, July/August 2002.
3. Craig-McFeely, P. M. et al., ``Prospective Observational
Cohort Safety Study to Monitor the Introduction of a Non-CFC
Formulation of Salbutamol with HFA 134a in England,'' International
Journal of Clinical Pharmacology and Therapeutics, 41:67-76, 2003.
4. Goldman, D. P. et al., ``Pharmacy Benefits and the Use of
Drugs by the Chronically Ill,'' The Journal of the American Medical
Association, 291:2344-2350, 2349, May 19, 2004.
5. United Nations Environmental Programme, ``Production and
Consumption of Ozone-Depleting Substances 1986-2000,'' 2002.
6. U.S. Environmental Protection Agency, ``The Benefits and
Costs of the Clean Air Act: 1990-2010'' (http://www.epa.gov/air/sect812/copy99.html).
7. 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.
8. American Lung Association, ``Trends in Asthma Morbidity and
Mortality,'' Epidemiology & Statistics Unit, Research and Scientific
Affairs, April 2004.
9. Mannino, D. M. et al., ``Surveillance for Asthma--United
States, 1980-1999,'' Morbidity and Mortality Weekly Report,
51(SS01):1-13, March 29, 2002.
10. Analysis completed by FDA based on information provided by
IMS Health, IMS National Prescription Audit\TM\, 2004; IMS Health,
IMS MIDAS\TM\, Q1/2004--Q2/2004. These data can be purchased from
IMS Health. Please send all inquiries to: IMS Health, Attn: Brian
Palumbo, Account Manager, 660 West Germantown Pike, Plymouth
Meeting, PA 19462.
11. Rozek, R. P., and E. R. Bishko, ``Economics Issues Raised in
the FDA's Proposed Rule on Removing the Essential-Use Designation
for Albuterol MDIs,'' National Economic Research Associates, August
13, 2004 (FDA Docket No. 2003P-0029/C25).
12. Agency for Healthcare Research and Quality, ``Albuterol
Inhalers: Prescriptions per User, Price per Prescription and
Expenditure Given Use,'' spreadsheet prepared at FDA's request for
this rulemaking, 2004.
13. Ringel, J. S. et al., ``The Elasticity of Demand for Health
Care,'' National Defense Research Institute, Rand Health, 2002.
14. U.S. Census Bureau, ``Income, Poverty, and Health Insurance
Coverage in the United States: 2003,'' Current Population Reports,
U.S. Department of Commerce, pp. 14-15, August 2004.
15. Morelli, D., and M. R. Koenigsberg, ``Sample Medication
Dispensing in a Residency Practice,'' Journal of Family Practice,
34(1):42-48, 1992.
16. Peterson, M. C. et al., ``Disposition of Pharmaceutical
Samples from a Private Medical Clinic,'' Journal of the American
Pharmacists Association, 44(3):397-398, 2004.
17. U.S. Department of Health & Human Services, ``Guidance on
Proper Consideration of Small Entities in Rulemakings of the U.S.
Department of Health and Human Services,'' May 2003.
18. Congressional Budget Office, ``How Increased Competition
from Generic Drugs Has Affected Prices and Returns in the
Pharmaceutical Industry,'' July 1998.

List of Subjects in 21 CFR Part 2

Administrative practice and procedure, Cosmetics, Devices, Drugs,
Foods.

0
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, 21 CFR part 2 is amended as follows:

PART 2--GENERAL ADMINISTRATIVE RULINGS AND DECISIONS

0
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]

0
2. Section 2.125 is amended by removing and reserving paragraph
(e)(2)(i).

Dated: March 29, 2005.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 05-6599 Filed 3-31-05; 8:45 am]
BILLING CODE 4160-01-S