New Challenges for Compounding Pharmacies

 New Challenges for Pharmacy Compounding in Florida

Historically, compounding has occupied a significant role in U.S pharmacy practice. In fact, by 1938, the United States Pharmacopeia had been providing compounding instructions for more than 100 years. State pharmacy practice acts also regulated and included the term compounding. Far from restricting compounding, the states specified that state-registered or licensed health care professionals were permitted to engage in the practice of compounding.

One issue that remains important is whether or not the FDA has authority to regulate compounding – a question which depends on whether compounding qualifies as manufacturing new drugs since FDA has the authority to approve newly manufactured drugs and devices.  The Fifth Circuit, for example, held that the definition of a new drug was never intended to apply to compounded medications.

Since 2005, however, a series of tragic incidents have occurred resulting from unsafe or unsterile compounding practices. Most significantly, the meningitis outbreak in Massachusetts caused by injectable drugs compounded at New England Compounding Center (NECC) resulting in a $100 million settlement, caught the attention of public and legislators. Similarly, the deaths of 21 polo horses resulting from unsterile compounding practices in Florida prompted strong reactions and rhetoric from federal regulators and state boards of pharmacy.

Most recently, compounding pharmacies in Texas and other states, sometimes through physician spokespeople or sales representatives, have also offered physicians lucrative investment opportunities in compounding pharmacies which has caught the attention of the national news media,

Lastly, the FDA has executed numerous onsite inspections (reactive and proactive) at compounding pharmacies since October of 2012, and in many cases, has issued a Form 483 which signals quality problems, including contaminated products and sterile practices that create risks of contamination. In addition, in its recent non-binding recommendations regarding compounding pharmacy the FDA reiterated that if compounding pharmacies do not meet very specific criteria to compound drugs, then they will be subject to good manufacturing practices (GMP), newly approved drug application requirements, and the labeling of drugs for adequate use requirements. More importantly:

“If FDA determines that an individual or firm compounds a drug product that does not meet the conditions of section 503A, then ….the individual or firm that compounds the drug product may also be subject to a warning letter, seizure of product, injunction, and/or criminal prosecution..”

Florida Special Permit Rule and Proposed Rule for 2015

At the end of 2013, based on the influx of compounding pharmacies in Florida, Florida reevaluated some of these important issues and passed Florida Statute Section 465.0196.

Among other things, the new law requires all pharmacies engaging in sterile pharmacy compounding and any new establishments seeking to engage in sterile pharmacy compounding, with the exception of Special Parenteral/Enteral (Stand Alone) and Special Parenteral/Enteral (Extended Scope) pharmacies, are required to obtain special permits. The deadline for obtaining permits was March 21, 2014.

Prior to obtaining a special compounding permit, a new establishment must also:

• Submit copies of fingerprints electronically to a Live Scan vendor and
• Must undergo an inspection.

Requirements for all (existing and new) special permit holders also include:

• Completing a 35 question application focusing, primarily, on quality assurance and quality control procedures and the extent to which certain special equipment and special techniques will be used.
• Development of a policies and procedures that will be maintained for the compounding, delivery, and dispensing of sterile preparation prescriptions;
• Documented ongoing quality assurance program that monitors personnel performance, equipment, and preparations; and
• Quality assurance audits at regular planned intervals, including infection control and sterile technique audits.

Compounding Quality Act (CQA) and Compounding Clarity Act (CCA)

In response to the recent tragic events resulting from unsafe compounding practices, Congress proposed the Compounding Clarity Act (CCA), and the Compounding Quality Act (CQA).

The CAA seeks to amend Section 503A of the FDCA, although, thus far, the only change to 503A is that compounders may now advertise their compounding services without running afoul of the misbranding provisions as long as the advertising is “not false or misleading.”

Indeed, the following sentence in Section 503A has been deleted entirely:

A drug may be compounded under subsection (a) of this section only if the pharmacy, licensed pharmacist, or licensed physician does not advertise or promote the compounding of any particular drug, class of drug, or type of drug.

The Senate has not yet considered the remaining provisions of the CCA and it may very well die in Committee.

According to the current version of Section 503A, compounders are exempt from the FDCA requirements concerning current good manufacturing practices, the labeling of drugs with adequate directions for use, and the approval of drugs under new and abbreviated drug applications, provided that they meet specific criteria.

The CQA amends Section 503B of the Food Drug and Cosmetics Act (FDCA). According to the CQA, certain compounded medications will not be subject to (1) FDA’s misbranding provision (2) FDA’s new drug application filing requirements or (3) Section 582 of the FDCA, which sets forth rules governing what substances are generally recognized as safe for their intended use provided thatthey meet eleven requirements for registration as an outsourcing facility.

Some bright line rules regarding outsourcing facilities:

• A facility only compounds “sterile drugs” which are drugs intended for parenteral administration, an ophthalmic or oral inhalation drug in aqueous format, or a drug that is required to be sterile under State or federal law.
• Drugs must be compounded in an outsourcing facility under the direct supervision of a licensed pharmacist.
• An outsourcing facility, by definition, is not required to be a licensed pharmacy .

Furthermore, outsourcing facilities are subject to:

• Annual reporting requirements each June.
• Unannounced inspections based on several predetermined “risk factors.”
• Adverse event reporting requirements.
• FDA’s rigorous Good Manufacturing Practices (GMP) standards.

Florida versus FDCA

At a minimum, there are two significant issues with respect to the differences between the current version of 503A of the FDCA and the Florida Administrative Code governing pharmacy compounding.

First, 503A does not specifically exempt office use compounding from certain FDCA requirements related to  misbranding, new drug application filings, or substances generally recognized as safe for their intended use pursuant to Section 582 of the FDCA. By comparison, if a series of requirements are met, Florida specifically permits a pharmacist to dispense a quantity of a compounded drug to a practitioner in a health care facility or treatment setting, including a hospital, ambulatory surgical center, or a pharmacy.

Second, Florida’s definition of compounding is open to broad interpretation and includes “incorporating ingredients to create a finished product for dispensing to a patient for administration by a practitioner or the practitioner’s agent” and “preparing a unique finished product containing any ingredient or device” covered by the definitions of medicinal drugs or an institutional formulary system.  By contrast, 503B of the FDCA states that compounding is “the combining, admixing, mixing, diluting, pooling, or reconstituting, or otherwise altering of a drug or bulk drug substance to create a drug.”

Open Questions

• To what extent will FDA delegate some of its 503A enforcement decisions to State Boards of Pharmacy?
• Will the FDA rely on the definition of compounding in 503B for purposes of enforcement?
• To what extent will compounders seek the protections provided by the outsourcing facility safe-harbor?
• How aggressively will FDA monitor and enforce outsourcing facility compliance with GMP regulations  given that compounders, traditionally, have not been subject to or familiar with GMP?
• Based on the new regulations, will relators continue to allege new False Claims Act theories of liability based on FDCA violations? Will such theories gain more traction than before under a worthless services theory?
• Will compounders now more aggressively market compound medications to physicians and others given the official deletion of the language in Section 503 restricting advertising?
• Will compounders continue to argue, based on applicable federal case law, that compounding is not manufacturing, and therefore, the FDA has no authority to impose additional requirements or restrictions on the century old practice? In light of the CQA and the current version of 503A of the FDCA, such an argument seems tenuous, at best. Importantly, the CQA makes it clear that the FDA still considers compounded drugs to be new drugs unless the compounding pharmacy satisfies the extensive requirements provided in Section 503A or 503B.
• What steps will compounding pharmacies currently compounding controlled substances, e.g., pain creams, take to simultaneously comply with DEA registration requirements, Florida special permit requirements, and, where applicable, Section 503A of the FDCA?
• Will the rigorous special permit application requirements in Florida discourage new entrants in the market?
• Will the current regulatory environment lead to more misbranding prosecutions, inspections, or Form 483s? Will the regulations make compounding pharmacies more vulnerable to unknowing violations of the misbranding statute, which is a criminal statute?

Author: Andrew Feldman

Mr. Feldman represents professionals, corporations, health care providers, and health care marketers in government investigations and prosecutions throughout the United States. Mr. Feldman works tirelessly for his clients from the time an investigation begins until the time a jury renders a verdict.

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