United States: FDA Reveals Oversight Plan For Traditional Pharmacy Compounding

Last Updated: December 9 2013
Article by Michael A. Walsh

On November 27, 2013, the president signed the Drug Quality and Security Act  into law.  Title I, the "Compounding Quality Act" (the "Act") amends the Food Drug and Cosmetic Act ("FDCA") by inserting a new section, 21 USC 353b.   For a general discussion of the Act, see our prior post here.  

FDA Issues Draft Guidance

On December 2, 2013, the FDA issued three draft guidance documents addressing how it intends to enforce the Act. These documents address traditional pharmacies (here), registration and reporting for outsourcing facilities (here) and (here).  

With respect to what it terms "traditional pharmacies," the FDA has stated:

Drugs produced by compounders that are not registered as outsourcing facilities must meet the conditions of section 503A to qualify for the exemptions specified in that section. Even if the conditions of section 503A are met ... All other applicable provisions of the FDCA remain in effect for compounded drugs, even if the conditions in section 503A are met. For example, a compounded drug cannot be contaminated or made under insanitary conditions... . And if a compounded drug does not qualify for the exemptions under either section 503A or 503B of the FDCA, the compounded drug would be subject to all of the requirements of the FDCA that are applicable to drugs made by conventional manufacturers... .

Traditional (i.e. Non-Sterile) Compounding Pharmacies

Draft Guidance: Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food, Drug, and Cosmetic Act ("Draft Guidance")

The Draft Guidance applies to "traditional" compounding pharmacies that do not register as outsourcing facilities and lists ten (10) conditions under 21 USC 353a that exempt traditional compounding pharmacies from the requirements of the FDCA that are generally applicable to drug manufacturers, such as good manufacturing, labeling and prior approval. For the FDA not to consider the compounded product "adulterated" or an "unapproved new drug", the compounded drug must be:

1.    based on a prescription for an individual patient;

2.    in a pharmacy in limited quantities if there is a history of prescriptions from a licensed practitioner;

3.    in compliance with USP;

4.    compounded using bulk substances from a FDA registered facility;

5.    using substances accompanied by valid certificates of analysis;

6.    in compliance with an USP or NF monograph, if it is not compounded from a bulk substance;

7.    not on the list of products removed from the market;

8.    not "essentially copies of commercially available drug products;"

9.    not a product identified by the FDA as presenting demonstrable difficulties for compounding; and

10.subject to inspection.

The 5% Rule and Inspections: The Act returns the state of the law to 2002 by imposing the limitations for "inordinate amounts" and "5%" under 353a(b)(3)(B)(i-ii). Under 353a(b)(1)(D) "a drug product may be compounded" if the pharmacist (or physician) "does not compound regularly or in inordinate amounts...any drug products that are essentially copies of commercially available drug products." The phrase "inordinate amounts" is to be defined by the FDA. The 5% limitation provides that a pharmacy may not compound a "drug product" (i.e. it must comply with the new drug requirements) unless:

(i)         The state where the drug is compounded has a memorandum of understanding (MOU) with the FDA for state investigations of complaints relating to "compounded drug products" distributed out of state; or

(ii)        The total compounded products distributed out of state do not exceed 5% of the total prescription orders. 

No Current Enforcement of the 5% Rule: The FDA only issued a draft MOU in 1999 and it has stated in the Draft Guidance that it "intends to publish a new draft MOU for comment that will replace the January 1999 draft." The FDA states that it "does not intend to enforce the 5% limitation until 90 days after FDA has finalized an MOU and made it available to the State... ." 

FDA further advised that it is withdrawing the May 2002 Compounding Policy Guide (CPG Sec. 460.200) entitled, Pharmacy Compounding, and the November  1998 guidance entitled, Enforcement Policy During Implementation of Section 503A of the FDCA.

FDA's Lists of Lists

The Act requires FDA to develop a number of lists and on December 4, 2013 FDA published notices seeking "nominations" for the list of drugs that may or may not be compounded and bulk drug substances that may be used to compound under 21 USC 353a and 353b (here) and (here), and a list of drugs that present demonstrable difficulties for compounding (here). FDA also references its 1999 list of drugs withdrawn or removed from the market (here).


The Draft Guidance reiterates FDA's long held view that "compounded drugs are in fact new drugs" and are exempt from the FDCA new drug requirements "if and only if they comply with the conditions set forth in 21 USC 353a." The FDA "describes some of the possible enforcement actions FDA may bring..." including issuing warning letters, product seizures, injunctions and/or criminal prosecution for violations of the FDCA for compounding under unsanitary conditions, substandard quality including strength and purity, or where the "labeling, advertising, and promotion" are deemed "false or misleading."

In the past, the FDA has stated that "when the scope and nature of a pharmacy's activities raise the kinds of concerns normally associated with a drug manufacturer and result in significant violations of the new drug, adulteration, or misbranding provisions of the Act, FDA has determined that it should seriously consider enforcement action."

For traditional compounding pharmacies, the FDA has stated it will employ what it terms a "risk-based enforcement approach." How the FDA will rein in the burgeoning business of non-sterile compounding will need to await formal rulemaking. In the meantime, the FDA has stated that it has broad and sweeping new powers to treat traditional compounding pharmacies as drug manufacturers, and that it intends to use those powers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael A. Walsh
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