The federal government proposes and finalizes approximately 4,000 new rules every year. In general approximately 800-1,000 will directly affect small business. A 2008 study by the U.S. Small Business Administration’s Office of Advocacy estimated that the cost of complying with federal rules and regulations exceeds $1.75 trillion per year with small businesses spending approximately 36% more per employee than their large business counterparts.
What is a small business to do when a new proposed rule comes out that will hit them directly in the pocketbook?
Get active!There is a little known process where you can directly engage the agency proposing the rule and get results: public comment letters. An agency must accept public comment letters on any proposed rule to assess whether the cost to comply with the regulation will have a significant impact on a substantial number of small businesses. If it does they must conduct analysis under the Regulatory Flexibility Act (“RFA”). The Office of Advocacy, through the U.S. Small Business Administration enforces the RFA against the Agencies. The greatest weapons at Advocacy’s disposal are the public comment letters that can be utilized to negotiate with the agency to make the proposed rule less burdensome. While your trade association might be preparing one of these letters, it is imperative that individual small businesses participate as well.
From experience, certain letters have no effect given the content. In the past, letters received by the agencies that basically said, “this rule sucks and will cost my business more”will not lead to a change in the rule. Here are some tips for successful letter content:
- Quantitative: Detail quantitative information as much as possible. If a trade association estimates that the rule will increase the cost of a 510k permit by $XX,XXX and delay approval’s by X months this is key to include.
- Business Issues: If you can detail what the result of having to spend more time and money to get an approval means to your business it is very effective. “The proposed changes to the rule will cost my company $XX,XXX and will not allow me to hire an additional full time employee.” Directly tying the more stringent rule to a direct loss of jobs or to a freeze in hiring, particularly with this economy, gets your letter noticed.
- Qualitative: Remember, there is as much politics in the agencies as with the elected officials. Everything is always about the “children and seniors”. Speaking directly about delay’s caused by the proposed rule in getting new technologies to market and the effect it could have on “children and seniors” is effective.
- RFA: In every letter you should mention that you believe the proposed rule, “will have a significant impact on a substantial number of small businesses and request a thorough and detailed Regulatory Flexibility Act analysis.” This will require the U.S. SBA’s Office of Advocacy to directly engage the FDA over the costs of the rule. Advocacy economists will work independently and in conjunction with industry to assess the real costs of the proposal. If they are significant, (i.e., would cost industry more than $100mn) the FDA is required to work with Advocacy and industry to mitigate the costs.
- Reference the rule title and docket number (FDA-2011-D-0453) in your submission.
- Specificity: In general the real problem with many of the proposed rules is not that they are more stringent (they are) but that they are written with a lot of gray area. This means they are subject to different interpretations by each individual at the FDA as well as the regulated public. If it is not clear upon reading the guidance whether you have to submit a new application then the rule has not been well written. Asking the agency to clarify certain parts of the guidance is constructive.
- Suggestions: If you have a specific “constructive” suggestion on one item in the guidance or on the whole thing that will help to make it less costly and more specific it is good to include it. The Office of Advocacy can potentially use it in their analysis.
- 8) Send comments to:
Division of Dockets Management
Food and Drug Administration
5630 Fishers Lane, Room 1061, (HFA-305)
Rockville, MD 20852
Also send a CC in hard copy or in an email to:
Mr. Linwood Rayford
Office of Interagency Affairs
Office of Advocacy
U.S. Small Business Administration
409 3rd Street, SW
Washington, DC 20416
Does the process work?
In 2002 the EPA proposed the Spill Prevention Control and Countermeasures rule. Industry and the Office of Advocacy got very engaged with the EPA and as of 2009; the rule had still not been finalized or implemented.
About Michael T. Hull
Michael Hull | Managing Director and Co-Founder
Michael T. Hull is a former international investment banker that worked on structured product and structured credit trading desks in Japan and London for over 7 years and transacted business with companies and governments around the world. He was an original board member of the Arizona Angels investment group and has dealt with numerous start-ups on business plans, strategic planning, fund-raising and government relations as well as for his own businesses.
Mr. Hull started and operated a Medicare certified outpatient facility as well as working with CMS on regulatory issues in the health care sector. He was appointed as the Regional Advocate from 2002- 2009 for the U.S. Small Business Administration which oversees the SBIR/STTR programs.
About InVent Life Sciences
InVent Life Sciences is a professional management company that manages the commercialization process from inception to the sale of the product. We get results by focusing on Operational Excellence by developing a plan with our clients and then execute it with passion.