Computation of FDA Renewal Penalties

The circular implements the rules under Section 3, Paragraphs (A)(2) and (B)(2) of Article I of Book II of the IRR on Licensing of Establishments and Registration of Health Products under Republic Act No. 9711.
The circular states that the surcharge/penalty framework in those IRR provisions must be used for renewal applications filed after expiration.
The circular also recognizes fee reference baselines from Administrative Order No. 50 s. 2000 for purposes of illustrating example computations.

The circular is issued to ensure coherence in the FDA regulatory system for establishments and products under the FDA regulatory framework implemented through Republic Act No. 9711.
The circular sets guidelines on how surcharge/penalty and related processes apply when renewal applications are submitted after expiration.

The surcharge/penalty rules apply to applications for renewal of a License to Operate (LTO) of establishments and renewal of Certificates of Product Registration (CPR) of health products that are received after their expiration date.
The computation rules apply even in succeeding renewal applications, using the same formula and principles for late receipt after expiration.
The validity and effect of an LTO/CPR renewal application depend on whether the application is received within one hundred twenty (120) days from original expiry or after the 120th day.
The circular’s “Automatic Renewal” rule distinguishes late renewal filings from cases that would otherwise be considered automatic renewals.

The term “renewal licensing or registration fee” means the fee charged at the first instance of renewal, and it is the base for computing the surcharge/penalty.
The circular treats the delay percentage as increasing by 10% per month (or fraction), with the percentage increasing up to a maximum corresponding to four (4) months or one hundred twenty (120) days.
Every fraction (first day and so forth) of a month is considered one whole month for applying the applicable percentage.
LRF (Legal Research Fund) is computed as 1% of the applicable renewal fee, but the circular sets a minimum: no case less than Php10.00.

The circular imposes surcharge/penalty only when the renewal application is received after expiration, following Section 3, Paragraphs (A)(2) and (B)(2) of Article I of Book II.
For renewal applications received within one hundred twenty (120) days from original expiry, the circular requires this computation:
- Surcharge/Penalty = 2 × (renewal licensing or registration fee) + 10% × (renewal licensing or registration fee)
The applicable percentage increases 10% for every month until a maximum of four (4) months or one hundred twenty (120) days.
The circular provides that every fraction of a month counts as a full month for purposes of the percentage increase.
For this within-120-days scenario, the circular provides that the LTO or CPR shall be considered valid and existing until a decision or resolution by the FDA is rendered on the renewal application.

For renewal applications received after the 120th day from the expiry date, the circular requires the renewal to be treated using an initial-fee structure plus a higher surcharge/penalty:
- Fee = Initial Filing Fee + Total Surcharge/Penalty
The circular requires this total surcharge/penalty computation after the 120th day:
- Total Surcharge/Penalty = 2 × (renewal licensing or registration fee) + 40% × (renewal licensing or registration fee)
The circular directs additional consequences for this after-120-days case:
- The previous registration is considered expired and will turn initial.
- Health products manufactured, imported, or distributed within the surcharge period (120 days) are deemed valid.
The circular requires that once the application turns into a new/initial application, it must undergo the initial filing and evaluation process.
The circular provides that no new transaction/activity is allowed until the application is approved; for LTO, all existing CPRs covered by such license are deemed not valid until the license is approved.

The circular provides that there shall be no automatic renewal of an LTO or CPR when the application is filed after the expiration date.
When filed after expiration, the application must be treated as an ordinary renewal application and the circular’s surcharge/penalty rules apply.

The circular requires collection of LRF even when surcharge/penalty applies.
The circular mandates that LRF = 1% (Renewal Fee) computed based on the applicable renewal fee alone.
The circular sets a minimum LRF threshold: LRF shall be no case less than Php10.00.

The circular illustrates within-120-days computation by showing that the surcharge/penalty uses 2× renewal fee plus a 10% increment per month up to 120 days.
For LTO examples within the first and second months, the circular illustrates the stepwise percentage increase using the renewal licensing fee as the base.
For CPR examples within the first and second months, the circular illustrates the same method and applies the month-based percentage increases.
The circular illustrates after-120-days computation by showing the fee structure:
- Initial Filing Fee + (2× renewal fee + 40%× renewal fee).

The circular requires strict application of the above computation rules beginning November 15, 2011.
The circular is adopted on 02 November 2011, with Suzette H. Lazo, MD, FPSECP signing as Acting Director.