UPDATE: Congress Drafts Legislation that would Expand the FDA’s Role in Regulating Compounding Pharmacies

Posted by Health Law Informer Author on May 02, 2013
Food and Drug Law, Pharmacy


The Senate Health, Education, Labor, and Pensions (HELP) committee approved a bill on May 22 that largely tracks the Draft Legislation.  As outlined below, the bill would create a new category for large-scale compounders – known as “compounding manufacturers” – and give the FDA greater authority over compounding pharmacies.  The committee also incorporated the text (all 114 pages!) of the Drug Supply Chain Security Act into the bill.[1]  This new language would allow the FDA to create a prescription drug tracking system over the next ten years to reduce the threat of counterfeit or substandard drugs.  HELP is pushing for a full Senate vote on the bill sometime in June.

HELP also issued a Staff Report[2] advocating for greater FDA authority over large-scale compounders.  Among other compelling statistics, the Staff Report notes that “at least 48 compounding companies have been found to be producing and selling drugs that were contaminated or created in unsafe conditions” since the NECC-caused meningitis infection outbreak last fall.  The report also notes that “34 and 33 percent of compounded drugs tested by the FDA in 2001 and 2006 failed one or more standard quality tests,” respectively.

The bill continues to face criticism from FDA commissioner Dr. Margaret Hamburg and consumer advocacy groups, who think that the bill’s definition of “compounding manufacturer” is too narrow.  House Republicans, who believe that federal intervention is not the best solution, have also been critical.  Nevertheless, the House Energy and Commerce Committee on May 23 – for the third time – called FDA representatives, consumer advocacy groups, state pharmacy boards and other pharmaceutical industry representatives to testify as to the necessity of the compounding oversight legislation.

We will continue to update this post as the bill progresses.

Original Article 

On April 26, Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, unveiled bipartisan draft legislation (Draft Legislation) to clarify federal oversight of pharmaceutical compounding.[1]  “Compounding” involves the mixing of separate pharmaceutical ingredients together from bulk to make a single medication.  As compared to manufacturing, compounding traditionally takes place in a pharmacy after a pharmacist receives a prescription for the compounded medication.  The Draft Legislation was put forth largely in response to the meningitis outbreak linked to the Massachusetts-based New England Compounding Center (NECC), which injured 720 patients and killed another 48.  The NECC outbreak exposed a loophole in federal and state food and drug law: State authorities do not have the manpower, and the Food and Drug Administration (FDA), through the Federal Food, Drug and Cosmetic Act (FDCA), does not have adequate jurisdiction, to regulate large-scale compounding pharmacies that behave more like drug manufacturers than “traditional” neighborhood compounding pharmacies.

In November, 2012, while in the midst of dealing with the NECC outbreak, Dr. Margaret Hamburg, commissioner of the FDA, pleaded with Congress to address what she saw as an “enormous lack of clarity” regarding who may regulate large-scale compounders.[2]  She cited, among other concerns, conflicting court decisions and a lack of clear state and federal oversight of the compounding industry.  The result, she argued, is an incomplete regulatory framework that handcuffs the FDA and limits its ability to regulate large-scale pharmaceutical compounders, like NECC, that fail to meet the FDCA’s safety standards.  Until Congress provides this clarity, the FDA cannot require pharmacies like NECC to comply with its good manufacturing practices (GMPs) and other FDCA requirements designed to prevent catastrophes like the NECC outbreak.  The problems that arise from the lack of clear FDA federal jurisdiction in this area are compounded (no pun intended!) by the fact that many state agencies simply do not have the resources to regulate large-scale compounding pharmacies.  The end result can be that some large-scale compounding pharmacies, like NECC, slip through the regulatory cracks, and receive little or no oversight.

Generally speaking, states regulate the practice of pharmacy, which includes traditional compounding, and the FDA regulates manufacturing.  Recently, however, the distinction between compounding and manufacturing has become more blurred than ever.  On one end of the spectrum, for example, compounding a medication after receiving a prescription written by a physician for an identified individual typically falls within a state’s definition of the practice of pharmacy; on the other end, large scale manufacturing of compounds subject to new drug applications and prepared for sale in interstate commerce is clearly manufacturing, an activity regulated by the FDA.  But what about large-scale compounding pharmacies like NECC that compound far more medications than a traditional pharmacy?  Which agency(s) regulate these entities?  The Draft Legislation, as it currently reads, would provide some clarification.  Specifically, the Draft Legislation contains the following key provisions:

The Draft Legislation clarifies that all compounded drugs will be regulated as new drugs under the FDCA.  The foundation of the Draft Legislation is a clarification that all compounded drugs will be considered new drugs under the FDCA.  This means that, unless excepted, all compounded drugs will be subject to FDA federal jurisdiction, and would be required to comply with many of the FDCA’s regulations, including GMPs, and, in some cases, adequate directions for use requirements.2.                   

The Draft Legislation would create three new definitions.  The Draft Legislation would add the following definitions to 21 U.S.C. § 353(a), the section of the FDCA currently regulating compounding:

  1. Compounding:  The Draft Legislation defines “compounding” and “compound” to include compounding from bulk substances, admixing, and repackaging.
  2. Compounding Manufacturer:  The Draft Legislation defines “compounding manufacturer” as any entity that compounds any sterile drug without receiving a prescription, and introduces the compounded drug into interstate commerce.
  3. Traditional Compounder:  The Draft Legislation defines “traditional compounder” as any entity wherein a drug is compounded by a licensed pharmacist in a State-licensed pharmacy, or by a licensed physician or licensed veterinarian, to the extent permitted under State law, that compounds a drug upon receiving a prescription for an individual patient.

Applicability and exemption of the FDCA’s new drug requirements for traditional compounders and compounding manufacturers.  The Draft Legislation makes it clear that “traditional compounders” will be exempt from FDCA regulations.  “Compounding manufacturers,” on the other hand, will have to adhere to the following FDCA requirements:

  • Ensure that a licensed pharmacist oversees all compounding;
  • File biannually with the Secretary of HHS a list of drugs the compounding manufacturer has compounded over the course of the past 6 months;
  • Report to the Secretary of HHS knowledge of any serious adverse drug experience as soon as practicable, but in no event greater than 15 days after receipt of such knowledge;
  • Adhere to detailed new labeling requirements;
  • Pay an annual establishment and reinspection fee ($15,000 annually for a compounding manufacture that employs more than 25 employees, including employees of an affiliate, and 1/3 that amount for a compounding manufacturer employing less than 25 employees).

The Draft Legislation identifies three categories of drugs that may not be compounded.

  1.  Complex dosage forms and biologics.  The Draft Legislation permits the Secretary of HHS to promulgate regulations designating drugs, or entire categories of drugs, as complex dosage forms or biologic products that may not be compounded.  Alternatively, prior to publishing formal regulations, the Secretary may publish an interim list of complex dosage forms or biologics that may not be compounded by publishing notice in the Federal Register, and providing at least 30 days for comment.
  2. Marketed drugs.  A compounded drug that is an exact copy or a variation of a marketed drug may not be compounded unless either (a) there is a shortage of that drug, or (b) the prescribing physician or veterinarian states that the compounded variation makes a “significant difference” for the particular patient.
  3. Drugs removed from the market based on safety and efficacy concerns.  A drug removed from the market for safety and efficiency concerns may not be compounded unless the Secretary of HHS states otherwise in Federal Register.


The Draft Legislation will likely undergo significant revisions before its adoption — if it is adopted at all.  What is clear, however, is that the FDA is moving toward regulating compounding practices that have traditionally been regulated by state agencies.  Federal intervention will likely come to fruition in the near future, and many compounders who are not currently subject to the FDCA’s GMPs and other requirements will be faced with the challenge of having to comply with new regulations and additional oversight.  Accordingly, it is important that compounding entities become familiar with and track the Draft Legislation as it progresses as it appears that increased federal oversight is imminent.

[2] Sabrina Tavernise, F.D.A.Chief Seeks Expanded Authority to Improve Safety of Drug Compounders,  N.Y. Times, November 14, 2012.

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