It has been almost a year since a tainted steroid prepared by a Massachusetts compounding pharmacy caused a spinal meningitis outbreak that rocked the country. In response, proposed legislation is working its way through both the Senate and House of Representatives, aimed at addressing the gaps in regulation over compounding pharmacies at the federal level.
The Senate and House bills vary in the ways they propose to address the public health issues presented by compounding, and the reaction in Congress to the proposals has been mixed. The congressional debate on the appropriate level of oversight mirrors the discussions occurring at a national level: compounding interests groups advocate for an emphasis on regulation at the state level, while public health advocates, brand drug manufacturers and even Food and Drug Administration Commissioner Margaret Hamburg call for the FDA to have clear enforcement authority over compounders.
As compounding-related recalls continue to surface nationwide, and as the toll of last fall’s meningitis outbreak grows—to date, the Centers for Disease Control and Prevention report that 750 people were impacted by the outbreak, and 64 have died—pressure is building on the Senate and House to enact legislation. However, the impact of such legislation on the pharmaceutical industry is highly dependent on the form the legislation takes.
Brief History of Compounding
Before evaluating the various compounding legislative proposals, it is important to understand the history of compounding regulation, which provides a backdrop for the current state of regulatory uncertainty.
Compounding pharmacies have historically been regulated by state pharmacy boards, which provide oversight of licensing, sterility and the professional practice of local pharmacy facilities. Under the traditional definition of compounding, a compounder prepares products for patients who cannot take a drug in its FDA-approved form; this occurs in instances where patients may be allergic to an inactive ingredient in a brand product, or cannot take a drug as prepared by the manufacturer (such as pediatric or elderly patients who have difficulty swallowing pills).
Thompson v. Western States Medical Center et al.,
Traditional pharmacy compounding calls for drugs to be prepared based on individual prescriptions; thus, it is difficult to regulate products in the same way as manufactured drugs, since each customized batch is based on patient need. As it would be nearly impossible to require a new drug application (NDA) for each drug prepared by a compounder—and because compounders have been successful at ensuring minimal regulation at the federal level—the FDA does not regulate compounded drugs in the same manner as manufactured products.
In certain cases, “bad actor” compounders have used this lack of oversight to function as unregulated manufacturers, preparing copies of FDA approved drugs in large batches, but without going through the NDA process.
Until the meningitis outbreak in the fall of 2012, federal regulation of compounders has been strongly opposed by compounding pharmacy stakeholders. In 1997, the FDA Modernization Act (FDAMA) was enacted, which (among other things) prohibited compounders from acting as manufacturers and from making copies of FDA-approved products.
The law was challenged in court because one provision prohibited soliciting prescriptions and advertising any particular compounded drug. The case made its way to the Supreme Court which, in 2002, agreed that the restrictions on advertising and soliciting were impermissible restraints on free speech.
In 2008, the Fifth Circuit concluded differently, and held that the non-speech provisions of the underlying case were enforceable.
Today, federal regulation of compounding is split between the states in the Fifth Circuit and the rest of the country. In the majority of the country, the FDA has uncertain authority over compounders, which flows from a compliance guide issued by the agency after the 2002 Supreme Court decision. The guide does not carry the force of law, but it provides that the FDA may take enforcement action over pharmacy compounders who cross the line from compounding to manufacturing.
Current Issues in Regulation
As the only clear legislative authority over compounding pharmacies is at the state level, pharmacy boards are charged with overseeing everything from licensing to cleanliness. When compounders start to behave more like manufacturers, however, states often lack the expertise and resources to regulate such facilities. Further, shrinking state budgets make enforcement difficult, as regulators struggle to find the funds to coordinate the types of audits and investigations that would root out issues before they start.
While the FDA has some authority the regulate compounders who operate like manufacturers, it is often difficult to identify bad actors before a public health issue arises, as there is no federal registry of compounders. Further, even when bad actors are identified, the FDA’s unclear authority has made it difficult for the agency to request records for audits, or to gain access to facilities to ensure that compounded prescriptions are prepared in sterile environments.
This regulatory uncertainty has become increasingly important in recent years, as hospitals and health systems are pressured to switch from fee-for-service to capitated payment models. In efforts to cut costs, certain providers have come to rely on compounded products—which do not go through the NDA process and which are often significantly cheaper than brand counterparts—even when not required by patient need.
The legislative proposals currently being debated in Congress attempt to address the complex issue of compounding in different ways. However, the ultimate success of such legislation in curbing the abusive practices that caused last fall’s meningitis outbreak largely depends on both the amount of authority granted to the FDA and the funding of enforcement actions.
Senate Proposal: Pharmaceutical Compounding Quality and Accountability Act
Members of the Senate Health, Education, Labor, and Pensions (HELP) Committee introduced the Pharmaceutical Compounding Quality and Accountability Act on May 15.
The proposed law would create a new class of compounders called “compounding manufacturers,” who prepare drugs for shipment in interstate commerce. Unlike traditional compounders, who would remain subject to state regulation only, compounding manufacturers would also fall under the FDA’s enforcement jurisdiction, and would be prohibited from engaging in certain practices typically associated with manufacturing.
Excepted from the definition of compounding manufacturers are pharmacies in hospitals or health systems that ship drugs interstate within that hospital system, and pharmacies that compound positron emission tomography drugs or radiopharmaceuticals, unless they compound other drugs that would cause them to be compounding manufacturers (e.g., sterile products).
The proposed law would prohibit compounding manufacturers from (among other things) preparing drugs that are copies of products approved by the FDA. It also provides for a list of drugs that may not be compounded due to inherent difficulties in ensuring safety of such products, for instance, certain dosage forms, biologic products (or, products made of proteins or living things), or drugs that have been removed for the market for safety or efficacy reasons.
In addition, compounding manufacturers would be required to register with the FDA, and to pay annual fees starting at $15,000 in fiscal year 2015, with inflation adjustments. The proposed law also requires compounders to report to the U. S. Department of Health and Human Services (HHS) every six months the drugs sold in the previous six months.
In July, the legislation was amended to make it easier for compounders to prepare copies of FDA-approved drugs where there are national shortages 11 PLIR 951, 8/2/13. Additionally, a provision was added that allowed HHS to create a list of non-sterile drugs that could be prepared by compounding manufacturers.
The proposed law aims to provide concrete solutions to many uncertain issues relating to compounding regulation. Importantly, it clearly defines that type of practices that would make a compounder a compounding manufacturer, and establishes FDA oversight of those entities.
The new class of compounder proposed in the Senate bill would capture a substantial number of the pharmacies that have been engaging in practices that are closer to manufacturing than prescription-specific compounding. Further, it will provide the FDA with the enforcement authority it needs to root out problems before they become public health crises.
The annual fee would help address the problem of resources, providing the FDA with the funding necessary to expand its enforcement operations to audit and investigate a new class of compounders. Without this fee, the expanded enforcement jurisdiction would be essentially meaningless, as the inclusion of a new class of regulated bodies without an increase in funding would present a significant challenge for the FDA.
While the Senate bill contains certain potential loopholes—for instance, there are opportunities for exploitation of the exceptions for radiopharmaceuticals and hospital pharmacies—it provides the most robust attempt at regulating the compounding pharmaceutical industry since the passage of the FDAMA. By addressing the FDA’s lack of enforcement jurisdiction, in addition to providing funding for enforcement actions, this bill presents the best chance at addressing some of the more pervasive abuses in the compounding industry.
House Proposals
VALID Compounding Act
The Verifying Authority and Legality in Drug Compounding Act of 2013, or VALID Compounding Act, was introduced in May 2013 by Edward Markey (D-Mass.).
As with the other proposals, the VALID Compounding Act provides for the creation of a do-not-compound list, which includes drugs that are reasonably likely to harm patients, and products that have been withdrawn from the market for being unsafe or ineffective. It also prohibits, except in certain circumstances, compounding copies of commercially available drugs.
The proposed law requires compounders that do not prepare patient-specific prescriptions from approved ingredients to register with the FDA (subject to certain exceptions), and makes public the list of registered compounders. Pharmacies that perform high risk sterile compounding or that compound drug products for interstate shipment would require FDA oversight.
The VALID Compounding Act allows for greater reliance on state regulators than the Senate bill, in that it permits the FDA to enter into memoranda of understanding with states to allow for local regulation of certain compounders. This provision would permit the FDA to cede authority to states that are especially well-equipped to address compounding issues, while retaining greater enforcement rights in states that are less independent.
As with the Senate bill, the VALID Compounding act also requires compounders that perform high-risk sterile compounding and that ship drugs interstate pay a $15,000 inspection fee, with an inflation adjustment.
By increasing regulation over the bulk materials that are used to make compounded drugs, the VALID Compounding Act attempts to prevent the recurrence of public health crises like the spinal meningitis outbreak. And, like, the Senate bill, it provides for clear federal enforcement jurisdiction over high-risk compounders. Finally, the bill also provides for the funding necessary to implement the increased federal enforcement actions that would result from its implementation.
Compounding Clarity Act
The Compounding Clarity Act was introduced on September 12, 2013,
Under the proposed law, facilities that exceed certain volume limits would be subject to annual registration and reporting requirements, and would have to list the drugs they compound. They would also be required to report adverse events, and they would be subject to inspections and user fees.
A previous draft of the Compounding Clarity Act, which was never officially introduced in the House, contained neither a provision for a separate class of compounder, nor a clearly defined funding mechanism. Thus, the similarities between the previous draft and the bill circulated in September show the evolution of thinking about compounders, and perhaps indicate a greater appreciation among House detractors of the critical need for regulation.
S.A.F.E. Compounded Drugs Act
The Supporting Access to Formulated and Effective Compounded Drugs Act of 2013, or the S.A.F.E. Compounded Drugs Act of 2013, was introduced by Rep. Rosa DeLauro (D-Conn.) in August 2013, after its predecessor failed to be enacted in 2012 10 PLIR 1566, 12/14/12.
Like the proposals discussed above, the S.A.F.E. Compounded Drugs Act calls for a registry of compounding pharmacies, which would facilitate FDA enforcement actions. The bill also requires the imposition of minimum compounding standards, and the establishment of a list of ingredients and dosage forms that should not be compounded. Additionally, it encourages federal and state collaboration through regional training opportunities for state agencies, which would be conducted by federal regulators.
Although the S.A.F.E Compounded Drugs Act has some similarities to the proposed laws discussed above, this bill has not garnered the attention of regulators or stakeholders, who have focused their attention on the Senate bill, and the proposals by Markey and Griffith.
One feature of the S.A.F.E. Compounded Drugs Act worth noting is its focus on patient notification. The proposed law would require providers to give certain notices when prescribing a compounded drug, and to give patients written information about the safety of compounded drugs. Pharmacists would be required to provide a similar written notice to patients filling prescriptions.
The patient notice focus of the proposed law addresses certain misperceptions in the public about compounded drugs; particularly, general confusion about the difference between a generic drug (which is subject to FDA regulation) and a compounded drug (which contains unregulated ingredients). At a time when some providers have been known to prescribe compounded products because they are less costly than brand drugs, a better informed patient population could begin to ask critical questions of prescribers about the necessity of compounded drugs.
The Challenge of Enactment
Generally, the proposals discussed above overlap in key ways: they agree that traditional compounders should be regulated by the states, and that the FDA should have some enforcement jurisdiction over compounders whose activities exceed the limits of traditional compounding. The proposed laws differ on the types of entities that should be regulated by the FDA, and the Senate proposal and the Compounding Clarity Act are the only bills that would create a new class of compounders.
Any law that provides for increased enforcement would also have to provide for additional funding; and the Senate bill, the VALID Compounding Act and the Compounding Clarity Act would charge compounders in order to fund enforcement efforts.
While each of the proposals discussed above has certain merits, the Senate bill and the Compounding Clarity Act go the furthest to address the issues specifically identified by Hamburg during Congressional testimony 11 PLIR 404, 3/29/13, and provide the strongest foundation for FDA enforcement jurisdiction through the creation of a new class of compounder. However, the issue of FDA enforcement jurisdiction appears to be one of the greatest areas of conflict between proponents of increased regulation and those who feel the FDA already has sufficient enforcement jurisdiction through the policy guide.
As Congressional aides have reported that members of both the House and Senate aim to pass compounding legislation this fall, the final form of the law will likely strike a balance between a regulation that provides the strongest framework for protection of public safety and enforcement—and a regulation that can attract the necessary votes.
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