CARES Act Shifts FDA OTC Monograph Process to Administrative Order System
Regulatory Structure Transformation
The United States implemented Section 3851 of the CARES Act on March 27, 2020, transitioning the revision process for Over-the-Counter (OTC) drug monographs from federal rulemaking to FDA administrative orders. Monographs establish the Generally Recognized As Safe and Effective (GRASE) framework, defining the active ingredient, indications, dosage, route of administration, labeling, and testing criteria for products considered safe and effective. Meeting these conditions allows products to be marketed without individual new drug applications, although new ingredients, formulations, strengths, or routes of administration require the new drug application pathway. This change streamlines the management of over 80 therapeutic categories, approximately 800 active ingredients, and over 1,400 uses.
Redesigning Speed and Cost
Companies or the FDA can initiate changes to OTC monographs through an Order Modifying or Requesting (OMOR) process. The FDA then concludes with a proposed order, public comment period, and final order. This eliminates the lengthy legislative process previously required for each regulation, accelerating the incorporation of safety warnings and new ingredients. However, this system introduces Over-the-Counter User Fee Act (OMUFA) user fees. For the 2025 fiscal year, Tier 1 OMORs are priced at USD 559,777, and Tier 2 OMORs at USD 111,955. While this provides predictable development costs for large brands, it creates a barrier to entry for smaller, single-product companies, emphasizing the importance of scale and regulatory capabilities.
Product and Competitive Landscape
A prominent marketed product is Haleon (HLN)'s Advil, a widely available OTC pain reliever containing ibuprofen, which inhibits cyclooxygenase-1 and 2. A key competitor is Kenvue (KVUE)'s Tylenol, an OTC analgesic and antipyretic based on acetaminophen. Perrigo Company (PRGO) also offers ibuprofen and acetaminophen products under private label brands, creating price competition. These products are already in the Marketed stage, not in clinical phases 1, 2, or 3, and the new system involves changes to the monograph standard for a class of products rather than individual product approvals or advisory committee votes. Enhanced safety labeling requires all brands and private labels to adhere to the same standards, making the speed of manufacturing and label transitions critical for maintaining market share.
Industry and Market Implications
According to CHPA analysis, OTC drugs provide USD 102 billion in annual cost savings to the U.S. healthcare system, and Perrigo's 2025 Americas consumer self-care sales alone are projected to reach USD 2.585 billion. Therefore, the speed of monograph revisions is not just about administrative efficiency but also a factor influencing the product lifecycle and inventory disposal costs in the large self-care market. Brands like Haleon and Kenvue can leverage clinical and consumer data to propose differentiated standards, while Perrigo can respond with rapid private label launches and large-scale production. While patients benefit from improved access to the latest safety information and innovative ingredients, companies require robust regulatory operations to simultaneously manage quality systems, pharmacovigilance, and label changes.
The administrative order system, implemented on March 27, 2020, enables faster updates to the safety and labeling standards for over 80 therapeutic categories and approximately 800 active ingredients, turning regulatory responsiveness into a competitive advantage. Haleon (HLN)'s Advil, Kenvue (KVUE)'s Tylenol, and Perrigo Company (PRGO)'s private label analgesics, all in the Marketed stage, are affected by the same monograph changes, leading to short-term fluctuations in label, inventory, and manufacturing costs. The USD 559,777 Tier 1 OMOR fee in 2025 favors large companies with data and regulatory staff, while increasing the burden for smaller brands to introduce new ingredients. In the medium to long term, this represents a regulatory infrastructure change that reshapes new product launch cycles, private label penetration rates, and brand market share, as evidenced by the USD 102 billion in annual healthcare cost savings and Perrigo's USD 2.585 billion in Americas self-care sales.
Source: FDA Drug Approvals (rss)