The U.S. Food and Drug Administration recently announced the release of a revised Draft Memorandum of Understanding (MOU), Addressing Certain Distributions of Compounded Drug Products Between the State of [insert State] and the U.S. Food and Drug Administration pursuant to Section 503A of the Federal Food, Drug and Cosmetic Act (FDCA). The new draft MOU replaces an earlier version released on February 19, 2015, but never finalized; the 2015 draft MOU has now been withdrawn.

Section 503A of the FDCA directs FDA to develop a memorandum of understanding with the states to address the interstate distribution of “inordinate amounts” of compounded drugs and establish parameters for states to investigate complaints related to drugs compounded within the state but distributed out of state. Under Section 503A, interstate distribution of drugs compounded in states that do not to enter into the MOU is limited to 5 percent of the total prescription orders dispensed or distributed by a given pharmacy or physician. This limitation does not apply to pharmacies and physicians engaging in human drug compounding in states that have entered into an MOU.

FDA previously indicated that it does not intend to enforce the 5 percent limit on interstate distribution of compounded drugs until some period of time after the draft MOU has been finalized, allowing states time to consider and enter into the MOU. The 2015 draft MOU proposed a 180-day window and FDA reaffirmed its commitment to this time frame in its discussion of the revised draft MOU.[1]

A workable definition of “inordinate amounts” has been among the more controversial aspects of the MOU. In the revised draft MOU, FDA has increased the threshold for what constitutes inordinate amounts of compounded drugs distributed out of state from 30 percent to 50 percent of total prescription orders dispensed or distributed. Additionally, FDA removed the number of noncompounded drugs distributed by the compounder from the calculation of inordinate amounts. The calculation used to determine whether a pharmacy dispensed inordinate amounts of prescriptions out of state is now based solely on number of prescriptions of compounded medications dispensed.

FDA also eliminated the provision that would have required states to “take action” on the out-of-state distribution of inordinate amounts of compounded drugs. FDA instead replaced it with an agreement to inform FDA of such distribution to help inform FDA inspection priorities. Thus, instead of requiring regulatory action once a pharmacy is deemed to be distributing inordinate amounts interstate, FDA would require a system of information gathering and reporting to FDA. FDA acknowledges that in certain situations, such as when a pharmacy is physically located near state borders, it may be expected that a greater percentage of a pharmacy’s prescriptions may be shipped out of state. The revised MOU allows for information gathering and analysis of specific situations.

Under the terms of the new draft MOU, states that sign the MOU agree to:

  1. Investigate complaints about drugs compounded in the state, but distributed out of state, including complaints related to adverse events and/or quality issues;
  2. Take action permitted under state law to ensure that the compounding pharmacy investigates the causes of the complaints and addresses related public health risks;
  3. Notify FDA of and provide certain specified material about any serious adverse drug reactions or serious quality issues;
  4. Provide information to FDA on the results of any investigations connected to events reported to FDA;
  5. Notify any state regulators of physician compounding where reported complaints relate to drugs compounded by a physician and distributed out of state; and
  6. Maintain relevant records for at least three years from the date a final action was taken or determined to be unnecessary.

The revised draft MOU includes a number of other changes from the now-withdrawn 2015 draft MOU, many of which are based on comments received by FDA following its release of the 2015 draft MOU. Among the changes reflected in the revised draft MOU are the following:

  • Time frame for reporting serious adverse events and quality issues changed from 72 hours to three business days.
  • Definition of “distribution” revised to exclude dispensing that occurs at the same facility where drug was compounded.
  • Term “unit” replaced with “prescription order” for purposes of inordinate amount calculation.

FDA is accepting comments on the new draft MOU through December 10, 2018. Comments may be submitted electronically at or in writing to FDA’s Dockets Management Staff (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

Further details on the procedure for submitting comments to the Draft Guidance are available on the FDA’s notice in the Federal Register.