United States: Compounding Pharmacies Now Subject To Federal Oversight

On November 27, 2013, President Obama signed into law the Drug Quality and Security Act. Title I of this law—entitled the Compounding Quality Act (the "CQA")—allows the federal Food and Drug Administration (FDA) to oversee drug compounding in human health. The CQA does not apply to drugs compounded for animals.

The CQA allows the FDA to regulate compounding in human health in the following ways. First, the CQA creates a new FDA-regulated entity called an "outsourcing facility" that is permitted to engage in pharmacy compounding without a prescription. Second, the CQA amends and reinstates Section 503A of the Food, Drug, and Cosmetic Act (FDCA), which details certain requirements for compounding that does not take place in outsourcing facilities. Third, the CQA establishes new penalties for several categories of prohibited conduct. Fourth, the CQA requires enhanced communication between state boards of pharmacy and the FDA.

Key Components of the CQA

  1. Outsourcing Facilities. The CQA adds Section 503B to the FDCA, creating a new regulated entity called an "outsourcing facility." Outsourcing facilities are permitted to compound sterile drugs with or without a prescription. The CQA provides that outsourcing facilities may not compound essential copies of an approved drug or drugs that have been withdrawn or removed from the market for safety or efficacy. Under Section 503B, an essential copy is: (1) a drug that is identical or nearly identical to an approved or marketed drug; or (2) a drug, a component of which is a bulk drug substance that is a component of an approved drug or marketed drug, unless the prescribing practitioner determines the compounded drug produces a change that makes a clinical difference for an individual patient.

Licensure, Reporting and Inspection Requirements.
Outsourcing facilities are required to register with the FDA, comply with Current Good Manufacturing Practices (cGMPs), report adverse events to the FDA and make semiannual reports to the FDA of the drugs the facility compounds. Outsourcing facilities are not required to be licensed pharmacies, and as such, they may or may not obtain prescriptions for an identified patient. Outsourcing facilities will also be subject to FDA inspections on a risk-based schedule and are required to pay an annual establishment fee, as well as fees for reinspection.

Labeling Requirements. Drugs compounded at an outsourcing facility must include on each label of a compounded drug the statement, "This is a compounded drug," or a reasonably comparable alternative statement. In addition, the label must contain the date the drug was compounded, the expiration date, the storage and handling instructions and a statement that the compounded drug is "not for resale" and/or "office use only" if the drug is not compounded pursuant to a patient-specific prescription.

  1. Compounding Outside of an Outsourcing Facility. The CQA amends and reinstates Section 503A of the FDCA, which exempts compounds from the FDCA's new drug approval and adequate directions for use labeling requirements, and does not require the compounds to be prepared in a facility that complies with cGMPs if they meet the requirements detailed in this section.

As with the outsourcing facilities, compounding pharmacies may not prepare compounds that appear on an FDA list of drug products that have been withdrawn from the market because they have been found to be unsafe or ineffective. Section 503A also does not allow compounding regularly or in inordinate amounts (as defined by the FDA) of any drug products that are essentially copies of commercially available drug products. Under 503A, the term "essential copy" does not include a drug product in which a change is made between the commercially available drug and the commercially available alternative for an individual patient, and the change produces a significant difference for the individual patient (as determined by the prescribing practitioner).

  1. New Penalties. The CQA imposes penalties on several new activities, including:

    • Reselling compounded drugs that are labeled "not for resale";
    • Intentionally falsifying a prescription for a compounded drug;
    • Failing to report drugs or adverse events for an outsourcing facility; and
    • Using advertisements or promotions of compounded drugs that are false or misleading in any particular.
  2. Enhanced Communication. The CQA provides for a mechanism for state boards of pharmacy and FDA to communicate regarding drug compounding. State boards of pharmacy are required to notify FDA if the state boards: (1) issue a warning letter or impose any sanctions for violations of pharmacy regulations pertaining to compounding; (2) suspend or revoke a state-issued pharmacy license or registration for violating state pharmacy regulations regarding compounding; or (3) learn of any recall of a compounded drug due to concerns regarding quality or purity. In turn, FDA is to immediately notify the state boards of pharmacy if it receives any notification from any state board of the above three situations, or if FDA determines that a pharmacy is acting contrary to Section 503A.

Conclusion

As the CQA is now law, pharmacies who compound may want to seek guidance on how their pharmacy practices may be impacted. FDA likely will issue regulations as to the CQA's implementation in the near future, as well as guidance on the FDA's current interpretation of the CQA.

If you have any questions about this Alert or would like more information, please contact Rachael G. Pontikes, Elinor L. Hart, any of the attorneys in our Pharmaceutical, Medical Device, Pharmacy & Food group or the attorney in the firm with whom you are regularly in contact.

This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.

Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.

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