In light of the 2012 fungal meningitis outbreak, regulation of pharmacy drug compounding has received significant attention. On April 16, 2013 the House Energy and Commerce Subcommittee on Oversight and Investigations heard testimony from FDA Commissioner Margaret A. Hamburg at a hearing entitled "A Continuing Investigation into the Fungal Meningitis Outbreak and Whether It Could Have Been Prevented."1 The hearing continued the Subcommittee’s investigation of the fungal meningitis outbreak linked to contaminated steroids manufactured by the New England Compounding Center (NECC). As at its first such hearing in November 2012, the Subcommittee examined whether the NECC contamination could have been prevented and FDA’s authority over compounding pharmacies.

Drug compounding refers to the process in which a pharmacist combines, mixes, or alters various ingredients to create a medication that is "tailored to the needs" of an individual patient.2 Compounding is generally used to prepare medications that are not commercially available, such as a drug in a lower dosage for a child, or a drug without a dye or a preservative in response to a patient allergy.

FDA Testimony: We Lack Clear Enforcement Authority

Commissioner Hamburg testified that "gaps and ambiguities" in the law have hindered FDA’s ability to take action against pharmacy compounding that exceeds the bounds of traditional pharmacy compounding.3 According to the Commissioner, FDA has considered pharmacies operating outside of traditional compounding as falling within FDA’s jurisdiction. These pharmacies include those that compound drugs without a specific patient prescription and publically advertise the availability of those drugs, which FDA has stated are actions that characterize them as drug manufacturers, rather than compounding pharmacies. While acknowledging that the agency could have used its enforcement discretion more aggressively to identify and regulate such manufacturing pharmacies, the Commissioner also stated that adverse court decisions to FDA enforcement authority over compounding pharmacies have impeded the agency’s ability to effectively police them.

Commissioner Hamburg also stated that the law is no longer well-suited to the compounding industry. For example, the Commissioner recognized that hospitals and clinics rely on compounding pharmacies that "function as out-sourced" producers of sterile drugs that were previously made by in-hospital pharmacies. Many such drugs are produced for "office use" and are not subject to the individual prescriptions that characterize traditional compounding.

History of FDA’s Authority and Enforcement against Pharmacy Compounding

Some courts have recognized that FDA has generally left regulation of compounding to States4 and that "FDA as a matter of policy has not historically brought enforcement actions against pharmacies engaged in traditional compounding."5

Despite these observations, FDA maintains that it has authority to regulate compounding. The Food, Drug, and Cosmetic Act (FDCA) forbids introducing any "new drug" into interstate commerce without FDA approval6 and under this provision, FDA has for many years maintained that pharmacy-compounded drugs are "new drugs, providing FDA with the power to" regulate compounding.7 Nevertheless, FDA has opted to allow traditional drug compounding to occur by exercising its enforcement discretion to allow such activity to be largely regulated by State pharmacy boards. Only when pharmacies were engaging in significant violations of the FDCA and jeopardizing public health would FDA act against compounders.

This enforcement discretion was announced in a Compliance Policy Guide (CPG) on pharmacy compounding in 1992.8 The document reflected the agency’s enforcement policy until 1997, when Congress enacted the Food and Drug Administration Modernization Act of 1997 (FDAMA).9 FDAMA created a new Section 503A of the FDCA, which exempted compounded drug products from the adulteration, misbranding, and new drug application provisions of the FDCA if they complied with certain requirements.10

Additionally, Section 503A prohibited compounding pharmacies from advertising or promoting compounded drug products. These solicitation and advertising provisions of Section 503A were subsequently challenged by compounding pharmacies as an impermissible regulation of commercial speech. In February 2001, the U.S. Court of Appeals for the Ninth Circuit agreed and declared the speech-related provisions were not severable from the remainder of Section 503A and therefore, the entire section was invalid.11 The Supreme Court in Thompson v. Western States Medical Center12 affirmed the Ninth Circuit’s decision with respect to the First Amendment restrictions, but did not rule on the issue of severability.

Because of the uncertainty caused by the Supreme Court’s decision in Western States, FDA re-issued an updated version of the 1992 CPG in May 2002,13 which reaffirms FDA’s authority over compounding and lists nine non-exhaustive factors that FDA will consider in exercising its enforcement authority over pharmacy compounding.

In early 2005, another group of compounding pharmacies filed a legal action in Texas contesting FDA’s authority to regulate compounded drugs under the FDCA. On appeal, the case reached the Fifth Circuit, which held in Medical Center Pharmacy v. Mukasey14 that the unconstitutional restrictions on commercial speech were in fact severable from the rest of the FDCA, and that the rest of the FDCA should remain in effect.

As a result, Section 503A does not apply to entities located in Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon, Washington, and Hawaii, but does apply to entities in Louisiana, Mississippi, and Texas.15 Consequently, FDA stated that it intends to apply the remaining provisions of Section 503A to the latter entities, and that it will apply the CPG to entities elsewhere.16

Current Pharmacy Compounding Enforcement

In a press release issued in June 2012, FDA stated it "may take enforcement action against compounding pharmacies if warranted [and that it] makes its enforcement decisions about compounded products on a case-by-case basis . . ."17 Less than three months later, the D.C. District Court reconfirmed FDA’s authority when it noted that the agency is "authorized to, and indeed does, use [enforcement mechanisms] against unlawful compounders, such as issuing warning letters; imposing import alerts; referring violations to the Department of Justice for a proposed civil action for seizure of the unlawful compound, [or] for an injunction or for criminal prosecution."18 Other federal courts have agreed that the FDA has authority to regulate compounding.19

As stated in the CPG, the FDA may take enforcement action when it believes a compounding pharmacy is behaving like a drug manufacturer. Chief among the activities likely to lead to enforcement is the production of standard versions of FDA approved drugs for general distribution.20 The agency also will act if it feels a compounding pharmacy is committing significant violations of the new drug, adulteration, or misbranding provisions of the FDCA.21

The FDA has not been shy regarding enforcement actions against compounding pharmacies. In 2008 alone, FDA issued 12 Warning Letters to compounding pharmacies considered to be engaging in non-traditional compounding.22

In response to the meningitis outbreak, FDA has taken increased action against pharmacy compounding. Not only did the agency hold a public meeting with state pharmacy boards in December of 2012 to discuss ways to facilitate increased communication and ensure sufficient regulation,

23 but it also established a new inspection program.24 Under the new program, FDA used a risk-based model to identify certain compounding pharmacies to inspect, relying on factors such as past serious adverse events or product quality reports, historical inspection data, referrals from State regulators, and public information/media reports. FDA inspected 31 facilities, mostly compounding pharmacies and drug repackers known to have produced sterile drugs in the past.25 The agency has also recently conducted 25 additional "for cause" inspections in response to directed complaints.26

Future Action

After confirming FDA’s view that all compounding should be performed in a licensed pharmacy by a licensed pharmacist or physician, and that there must be a medical need for the compounded drug, Commissioner Hamburg suggested that states regulate traditional compounding, and that FDA regulate nontraditional compounding, defined as "compounding that poses higher risks," such as sterile compounding in advance of or without receiving a prescription. However, she requested that Congress further delineate the difference between the two types of compounding. Commissioner Hamburg also stated that certain products should be banned from compounding, such as copies of FDA-approved drugs, extended release products, transdermal patches, liposomal products, and most biologics.

Congressional Reaction

In light of the Commissioner’s testimony, Subcommittee members were divided on whether FDA requires additional legislative authority. A report from Congressman Ed Markey (D-MA) suggests that state regulations have not been sufficiently comprehensive, leaving many pharmacies underinspected.27 Congressman Waxman of California echoed this concern, stating that Congress needs to "pass legislation that clearly delineates who is in charge of what."28

Other Subcommittee members argued that FDA already has authority to act. Subcommittee Vice Chair Michael C. Burgess, M.D. (R-TX) stated that the NECC model of compounding falls under drug "manufacturing," which FDA clearly regulates. In other words, whether FDA has authority over traditional compounders or not, the agency clearly has authority to inspect and require registration of drug manufacturers, and thus the agency can impose these requirements on companies calling themselves "compounding pharmacies" when they "manufacture" drugs, with or without a new legislation. Further, Subcommittee members noted that the agency’s prior enforcement actions against the NECC show it had the authority to act and failed to act in a timely manner. Subcommittee Chairman Tim Murphy (R-PA) noted that the agency has previously documented sterility concerns about the NECC, but had not followed up with the NECC. Indeed, FDA issued the NECC a Warning Letter29 four years after finding these problems initially, and responded to NECC’s challenges to the Warning Letter two years after the NECC had responded to FDA.

Senate action is pending. The HELP Committee just released draft legislation30 to address compounding pharmacy safety on April 26, 2013, and is aiming to have the Senate consider it by Memorial Day. Separately, in a Senate Finance Committee hearing about the Department of Health and Human Services’s budget proposal, legislation for funding to support FDA inspections and oversight is also currently being prepared.31

Only time will tell whether Congress will act to provide increased and more specific authority to FDA, though compounding pharmacies should remain concerned about FDA enforcement actions, as FDA has enforced its authority even without an explicit Congressional grant.