2024-16876. Outsourcing Facility Fee Rates for Fiscal Year 2025

Table 1—FDA PC&Bs Each Year and Percent Change

	FY 2021	FY 2022	FY 2023	3-Year average
Total PC&B	$3,039,513,000	$3,165,477,000	$3,436,513,000
Total FTE	$18,501	$18,474	$18,729
PC&B per FTE	$164,289	$171,348	$183,486
Percent Change From Previous Year	0.1811%	4.2967%	7.0838%	3.8539%

Section 744K(c)(2)(A)(ii) of the FD&C Act specifies that this 3.8539 percent should be multiplied by the proportion of PC&B to total costs of an average FDA FTE for the same 3 fiscal years.

Table 2—FDA PC&Bs as a Percent of FDA Total Costs of an Average FTE

	FY 2021	FY 2022	FY 2023	3-Year average
Total PC&B (proportion of costs)	$3,039,513,000	$3,165,477,000	$3,436,513,000
Total Costs	$6,105,480,000	$6,251,981,000	$6,654,058,000
PC&B percent	49.7834%	50.6316%	51.6454%	50.6868%

The payroll adjustment is 3.8539 percent multiplied by 50.6868 percent, or 1.9534 percent.

Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that the portion of the inflation adjustment for non-payroll costs for FY 2025 is equal to the average annual percent change in the Consumer Price Index (CPI) for urban consumers (U.S. City Average; Not Seasonally Adjusted; All items; Annual Index) for the first 3 years of the preceding 4 years of available data, multiplied by the proportion of all non-PC&B costs to total costs of an average FDA FTE for the same period.

Table 3 provides the summary data for the percent change in the specified CPI for U.S. cities. These data are published by the Bureau of Labor Statistics and can be found on its website: https://data.bls.gov/​cgi-bin/​surveymost?​cu. The data can be viewed by checking the box marked “U.S. city average, All items—CUUR0000SA0” and then selecting “Retrieve Data.”

Table 3—Annual and 3-Year Average Percent Change in U.S. City Average CPI

	2021	2022	2023	3-Year average
Annual CPI	270.970	292.655	304.702
Annual Percent Change	4.6980%	8.0027%	4.1165%	5.6057%

Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that this 5.6057 percent should be multiplied by the proportion of all non-PC&B costs to total costs of an average FTE for the same 3 fiscal years. The proportion of all non-PC&B costs to total costs of an average FDA FTE for FYs 2021 to 2023 is 49.3132 percent (100 percent minus 50.6868 percent equals 49.3132 percent). Therefore, the non-pay adjustment is 5.6057 percent times 49.3132 percent, or 2.7644 percent.

The PC&B component (1.9534 percent) is added to the non-PC&B component (2.7644 percent), for a total inflation adjustment of 4.7178 percent (rounded). Section 744K(c)(2)(A)(i) of the FD&C Act specifies that one is added to that figure, making the inflation adjustment 1.047178.

Section 744K(c)(2)(B) of the FD&C Act provides for this inflation adjustment to be compounded after FY 2015. This factor for FY 2025 (4.7178 percent) is compounded by adding one to it, and then multiplying it by one plus the inflation adjustment factor for FY 2024 (23.9215 percent), as published in the Federal Register on July 28, 2023 (88 FR 48878). The result of this multiplication of the inflation factors for the 10 years since FY 2015 (1.047178 × 1.239215) becomes the inflation adjustment for FY 2025. For FY 2025, the inflation adjustment is 29.7679 percent (rounded). We then add one, making the FY 2025 inflation adjustment factor 1.297679.

2. Small Business Adjustment Factor

Section 744K(c)(3) of the FD&C Act specifies that in addition to the inflation adjustment factor, the establishment fee for non-small businesses is to be further adjusted for a small business adjustment factor. Section 744K(c)(3)(B) of the FD&C Act provides that the small business adjustment factor is the adjustment to the establishment fee for non-small businesses that is necessary to achieve total fees equaling the amount that FDA would have collected if no entity qualified for the small business exception in section 744K(c)(4) of the FD&C Act. Additionally, section 744K(c)(5)(A) states that in establishing the small business adjustment factor for a fiscal year, FDA shall provide for the crediting of fees from the previous year to the next year if FDA overestimated the amount of the small business adjustment factor for such previous fiscal year.

Therefore, to calculate the small business adjustment to the establishment fee for non-small businesses for FY 2025, FDA must estimate: (1) the number of outsourcing facilities that will pay the reduced fee for small businesses for FY 2025 and (2) the total fee revenue it would have collected if no entity had qualified for the small business exception ( i.e., if each entity that registers as an outsourcing facility for FY 2025 were to pay the inflation-adjusted fee amount of $19,465).

With respect to (1), FDA estimates that 11 entities will qualify for small business exceptions and will pay the reduced fee for FY 2025. With respect to (2), to estimate the total number of entities that will register as outsourcing facilities for FY 2025, FDA used data submitted by outsourcing facilities through the voluntary registration process, which began in December 2013. Accordingly, FDA estimates that 80 outsourcing facilities, including 11 small businesses, will be registered with FDA in FY 2025.

If the projected 80 outsourcing facilities paid the full inflation-adjusted fee of $19,465, this would result in total revenue of $1,557,200 in FY 2025 ($19,465 × 80). However, 11 of the entities that are expected to register as outsourcing facilities for FY 2025 are projected to qualify for the small business exception and to pay one-third of the full fee ($6,488 × 11), totaling $71,368 instead of paying the full fee ($19,465 × 11), which would total $214,115. This would leave a potential shortfall of $142,747 ($214,115 minus $71,368).

Additionally, section 744K(c)(5)(A) of the FD&C Act states that in establishing the small business adjustment factor for a fiscal year, FDA shall provide for the crediting of fees from the previous year to the next year if FDA overestimated the amount of the small business adjustment factor for such previous fiscal year. FDA has determined that it is appropriate to credit excess fees collected from the last completed fiscal year, due to the inability to conclusively determine the amount of excess fees from the fiscal year that is in progress at the time this calculation is made. This crediting is done by comparing the small business adjustment factor for the last completed fiscal year, FY 2023 ($1,747), to what would have been the small business adjustment factor for FY 2023 ($2,011) if FDA had estimated perfectly.

The calculation for what the small business adjustment would have been if FDA had estimated perfectly begins by determining the total target collections (15,000 × [inflation adjustment factor] × [number of registrants]). For the most recent complete fiscal year, FY 2023, this was $1,354,548 ($17,823 × 76). The actual FY 2023 revenue from the 76 total registrants ( i.e., 65 registrants paying FY 2023 non-small business establishment fee and 11 small business registrants) paying establishment fees is $1,223,846. $1,223,846 is calculated as follows: (FY 2023 Non-Small Business Establishment Fee adjusted for inflation only) × (total number of registrants in FY 2023 paying Non-Small Business Establishment Fee) + (FY 2023 Small Business Establishment Fee) × (total number of small business registrants in FY 2023 paying Small Business Establishment Fee). $17,823 × 65 + $5,824 × 11 = $1,223,846. This left a shortfall of $130,702 from the estimated total target collection amount ($1,354,548 minus $1,223,846). This amount ($130,702) divided by the total number of registrants in FY 2023 paying Standard Establishment Fee (65) equals $2,011.

The difference between the small business adjustment factor used in FY 2023 and the small business adjustment factor that would have been used had FDA estimated perfectly is −$263 ($1,747 minus $2,011). The −$263 (rounded to the nearest dollar) is then multiplied by the number of actual registrants who paid the standard fee for FY 2023 (65), which provides us a total collection deficit of −$17,124 in FY 2023. No credit will be applied in FY 2025.

Therefore, to calculate the small business adjustment factor for FY 2025, FDA divides the projected shortfall of $142,747 for FY 2025 by 69 (the number of expected non-small businesses for FY 2025), which is $2,069 (rounded to the nearest dollar).

B. FY 2025 Rates for Small Business Establishment Fee, Non-Small Business Establishment Fee, and Reinspection Fee

1. Establishment Fee for Qualified Small Businesses ^[1]

The amount of the establishment fee for a qualified small business is equal to $15,000 multiplied by the inflation adjustment factor for that fiscal year, divided by 3 (see section 744K(c)(4)(A) and (c)(1)(A) of the FD&C Act). The inflation adjustment factor for FY 2025 is 1.297679. See section II.A.1 of this document for the methodology used to calculate the FY 2025 inflation adjustment factor. Therefore, the establishment fee for a qualified small business for FY 2025 is one third of $19,465, which equals $6,488 (rounded to the nearest dollar).

2. Establishment Fee for Non-Small Businesses

Under section 744K(c) of the FD&C Act, the amount of the establishment fee for a non-small business is equal to $15,000 multiplied by the inflation adjustment factor for that fiscal year, plus the small business adjustment factor for that fiscal year, and plus or minus an adjustment factor to account for over or under collections due to the small business adjustment factor in the prior year. The inflation adjustment factor for FY 2025 is 1.297609. The small business adjustment amount for FY 2025 is $2,069. See section II.A.2 of this document for the methodology used to calculate the small business adjustment factor for FY 2025. Therefore, the establishment fee for a non-small business for FY 2025 is $15,000 multiplied by 1.297679 plus $2,069, which equals $21,534 (rounded to the nearest dollar).

3. Reinspection Fee

Section 744K(c)(1)(B) of the FD&C Act provides that the amount of the FY 2025 reinspection fee is equal to $15,000, multiplied by the inflation adjustment factor for that fiscal year. The inflation adjustment factor for FY 2025 is 1.297679. Therefore, the reinspection fee for FY 2025 is $15,000 multiplied by 1.297679, which equals $19,465 (rounded to the nearest dollar). There is no reduction in this fee for small businesses.

C. Summary of FY 2025 Fee Rates

Table 4—Outsourcing Facility Fees

Qualified Small Business Establishment Fee	$6,488
Non-Small Business Establishment Fee	21,534
Reinspection Fee	19,465