Revised January 2003 
                                                          
                                                          
                                                          
                       FDA Labeling Cost Model 
                                                          
                                                          
                                                          
                                            Final Report 
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                  Prepared for 
                                                          
                                             Dr. Amber Jessup 
                                   DHHS/PHS/FDA/CFSAN/OSAS/DMST 
                                               200 C Street, SW 
                                              Mail Stop HFS0726 
                                            Washington, DC  20204 
                                                          
                                                          
                                                          
                                                  Prepared by 
                                                          
                                                Mary K. Muth 
                                              Erica C. Gledhill 
                                              Shawn A. Karns 
                                                       RTI 
                                  Health, Social, and Economics Research 
                                     Research Triangle Park, NC  27709 
                                                          
                                                          
                                        RTI Project Number 06673.010 
                                              RTI Project Number 
                                                   06673.010 
                                                          
                                                          
                                                          
                                                          
                       FDA Labeling Cost Model 
                                                          
                                                          
                                            Final Report 
                                                          
                                                          
                                          Revised January 2003 
                                                          
                                                          
                                                          
                                                          
                                                  Prepared for 
                                                          
                                             Dr. Amber Jessup 
                                   DHHS/PHS/FDA/CFSAN/OSAS/DMST 
                                               200 C Street, SW 
                                              Mail Stop HFS0726 
                                            Washington, DC  20204 
                                                          
                                                          
                                                          
                                                  Prepared by 
                                                          
                                                Mary K. Muth 
                                              Erica C. Gledhill 
                                              Shawn A. Karns 
                                                       RTI 
                                  Health, Social, and Economics Research 
                                     Research Triangle Park, NC  27709 
          
                         Contents 
          1. Introduction                                 1-1 
                         1.1 Project Objectives............................................................. 1-1 
                         1.2  Overview of the Report..................................................... 1-2 
                      2.  Overview of Packaging and Label Types and 
                         Printing Methods                 2-1 
                         2.1  Packaging and Label Types................................................ 2-1 
                            2.1.1  Directly Printed Food Packaging............................ 2-2 
                            2.1.2  Preprinted Labels................................................... 2-4 
                         2.2  Printing Methods............................................................... 2-7 
                            2.2.1  Rotogravure........................................................... 2-7 
                            2.2.2  Offset Lithography................................................. 2-8 
                            2.2.3  Flexography........................................................... 2-9 
                         2.3  Label Contents................................................................ 2-10 
                         2.4  References...................................................................... 2-11 
                      3.  The Process of Changing Food and Dietary 
                         Supplement Labeling              3-1 
                         3.1  Overview of the Change Process ....................................... 3-1 
                            3.1.1  Administrative Activities ........................................ 3-4 
                            3.1.2  Analytical Testing.................................................. 3-4 
                            3.1.3  Graphic Design..................................................... 3-5 
                            3.1.4  Market Testing....................................................... 3-6 
                            3.1.5  Prepress Activities.................................................. 3-7 
                            3.1.6  Cylinder and Plate Engraving ................................. 3-8 
                            3.1.7  Color Matching...................................................... 3-9 
                                                           iii 
                          
                                                                                  3.1.8  Label and Package Printing.................................... 3-9 
                                                                         3.2  Effects of Differences in the Compliance Period............... 3-10 
                                                                                  3.2.1  Differences for 12-, 24-, and 36-Month 
                                                                                              Compliance Periods............................................. 3-10 
                                                                                  3.2.2  Responses to Very Short Compliance Periods....... 3-12 
                                                                         3.3  References...................................................................... 3-14 
                                                                 4.  Labeling Cost Model Assumptions, Data, and 
                                                                         Calculations 4-1 
                                                                         4.1  Labeling Cost Model Assumptions..................................... 4-1 
                                                                         4.2  Labeling Cost Model Data................................................. 4-4 
                                                                                  4.2.1  Product Categories and Types................................ 4-4 
                                                                                  4.2.2  Parts of the Label and the Associated Number 
                                                                                              of Colors.............................................................. 4-19 
                                                                                  4.2.3  Costs Incurred on an SKU Basis............................ 4-27 
                                                                                  4.2.4  Costs Incurred on a Per-Formula Basis.................. 4-29 
                                                                                  4.2.5  Discarded Inventory Costs ................................... 4-31 
                                                                         4.3  Labeling Cost Model Calculations.................................... 4-41 
                                                                         4.4  References...................................................................... 4-44 
                                                                 5.  Instructions for Using the Labeling Cost Model                                                           5-1 
                                                                         5.1
                                                                                  Preparing to Run the Model............................................... 5-1 
                                                                         5.2  Selecting Model Inputs...................................................... 5-2 
                                                                         5.3  Outputs of the Model...................................................... 5-10 
                           Appendix 
                                                                         A Additional Product-Level Tables........................................A-1 
                                                                         B        Stata Data Sets and Programming Code .............................B-1 
                               iv