There is an emerging battle between small green businesses selling sunscreens and other OTC drugs and the giant companiesthat would rather we not exist. Our friends at Pacific Beach Organics are putting together a campaign to highlight this injustice, made possible by an easily missed passage in the huge CARES Act. We couldn’t have said it better ourselves, so we’re justgoing to preface their article here with a few bullet points that highlight the issue:
- The CARES Act, passed in March 2020, was written to help people through the pandemic.
- A hidden portion of it, however, was written with the help of an organization called the Consumer Healthcare Products Association (CHFA). It sounds like a group we’d all like to support but its board of directors includes biased leadership from companies like Proctor and Gamble, Johnson and Johnson, Colgate-Palmolive and Bayer.
- The law they helped write now requires that every OTC (over-the-counter) drug manufacturer pay $20,322 annually – this is a new fee with very little advanced notice.
- There is no sliding scale: small businesses are charged the same amount as large businesses in what is clearly an effort on the part of big business to dominate the OTC market.
- We’re not saying that we shouldn’t have an FDA monograph fee, but for small manufacturers like Stream2Sea and Pacific Beach Organics to pay the SAME user fee as the big boys is unprecedented and inappropriate.
- This issue is bigger than just one single business, we can’t allow these mega corporations to continue to take over small industry. We need to fight this together because we are a stronger force when we are unified.
- Please sign and share the petition, and help send it off to Congress and elected officials seeking a reassessment of the User Fee Rates. If you enjoy having a wide range of OTC drug options (including reef safe sunscreens) on store shelves, please take a second to help out small business today. https://www.petition2congress.com/ctas/immediately-rescind-reassess-otc-drug-monograph-reform-as-this-legislation-disproportionately-hurts-small?fbclid=IwAR29_7f-A2zEfBwz0C6UhacKAA8Pa3u67srvCI7_rfaP0nVYoXDlqKyYKFE
Small Green Manufacturers are Being Squeezed by the CHFA and FDA
If you are a consumer of green products, a supporter of small business, and a believer in the pursuit of the American Dream, this read is for you. This is also a call to action for all small to medium size OTC Drug MFG Facilities (FDA registered or not) in the USA, as the recent legislation that passed allowing the FDA to implement a new User Fee Program disproportionately hurts small to medium size facilities like Stream2Sea. There’s a lot more brewing underneath the surface than just OTC Drug Monograph reform so please grab a strong coffee ☕️ and follow along. 👇🏼
The CARES Act was passed on March 27, 2020 and was intended to help people in the midst of a global pandemic but Division A of the CARES Act includes an important legislative initiative that has negative implications for small OTC drug manufacturing facilities. Special interest groups (specifically the Consumer Healthcare Products Association) lobbied to have this provision added to the bill (detailed in subtitle F of title III), that essentially allows the FDA to implement a new User Fee Program (OMUFA), requiring all OTC drug manufacturers to pay THE SAME yearly User Fee (for 5 years) beginning in 2021.
The FDA is claiming this reform will help modernize their outdated system but in doing so wipes out small business and restricts future start ups from innovating new products. The same User Fee is being applied to all OTC drug manufacturers across the board but disproportionately hurts small to medium size facilities. This is not a nominal fee, and small to medium size facilities were billed $20,322 with a due date of May 10, 2021. Based on the current FY 2021 OMOR Fee Rates, OTC drug manufacturers are expected to pay the FDA $20,000 every year for 5 years for a grand total of $100,000 for those in Tier 2. Manufacturers who fall under Tier 1 of the fee schedule are expected to pay as much as $500,000.
Why are small to medium size facilities being charged the same User Fee Rate as mega corporations? Due to the global pandemic and challenges small businesses faced last year, paying such an inflated arbitrary fee is financially burdensome for smaller facilities and start ups. Currently registered companies who can’t afford to comply risk bankruptcy and losing their businesses while medium size facilities are strained. In the United States of America there should be a path forward for small business in the OTC drug industry and this recent reform stifles small business and innovation while claiming to do the opposite. It also allows bigger players in the OTC drug industry to continue to monopolize OTC drug products in the marketplace.
It’s critical to point out that the Board of Directors at the Consumer Healthcare Products Association (the group who lobbied for this legislation) is comprised of company heads for the Procter and Gamble Company, Johnson and Johnson Consumer Inc., Blistex Inc., Colgate-Palmolive Company, and other mega corporations. This is a concerted effort on the part of big business and big pharma to eliminate competition and monopolize the OTC drug industry under the veil of providing consumers with more OTC drug options. What this does is allow for mega corporations to be exclusive players in the OTC drug industry and consumers will be left with less product alternatives. This is not about OTC Drug Monograph Reform, this is about big business creating ruse associations compromised of high figure heads who are actively lobbying for legislation that hurts small business and furthers their own agendas.
Currently, there are hundreds of operating unregistered small OTC drug companies in the USA because it is already an expensive endeavor to register with the FDA. There’s virtually no road map or way forward for small businesses hoping to bring innovative products to the market. This recent change referred to by the FDA as the OMUFA fee is a nail in the coffin for a lot of registered small OTC drug manufacturers across the country that are currently struggling to survive. For the hundreds of other small facilities who were working to legitimize their products through FDA registration, they now have more financial hurtles to jump through as a result of these arbitrary fees.
Small OTC drug manufacturers play a vital role in our society and economy. They manufacture and bring to market sunscreens, hand sanitizer, and other products that are deemed essential items and they need immediate support to rectify this injustice. I am writing this today on behalf of all small businesses who have gone through great lengths to register with the FDA as well as the hundreds of other small businesses across the country who were aiming to do the same before this reform took place. This decision stifles small business, the very group of people who are so often at the forefront of innovation, and that’s what our country needs most right now. America needs innovation, sustainable products, and for small businesses to thrive as they are the real backbone of the country. Small time OTC drug manufacturers are comprised of more than just mega corporations, they are also family run businesses making products that push big business to do better and they have been disproportionately hurt by this legislation. Our elected officials should not allow the passing of laws that wipe out entrepreneurs while allowing those with more capital to monopolize an entire industry.
Please see the link below to sign the petition and help send it off to Congress and elected officials seeking a reassessment of the User Fee Rates. If you are a small or medium size OTC Drug MFG facility please share the link with your base and help rally the troops. If you’re a consumer who enjoys having a wide range of OTC drug options (including reef safe sunscreens) on store shelves (outside of the big chemical giants) please take a second to help out small business today.
Formulator & CEO
From Stream2Sea – Protect what you love
Autumn Blum, Founder & Cosmetic Chemist of Stream2Sea, the ONLY mineral sunscreen that’s been tested and proven safe for fish and coral larvae, AND has passed the stringent HEL Labs Protect Land + Sea certification.