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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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Reed's Compounding Pharmacy


Terry L. Scarborough
Founding Partner
Direct : (512) 487-4006


February 21, 2008

Tracking No. 8626 1516 2206 

Ms. Pamela B. Schweikert
U.S. Food and Drug Administration
19701 Fairchild
Irvine, CA 92612

Re: W/L 06-08

Dear Ms. Schweikert:

I write in response to the United States Food and Drug Administration's ("FDA"'s) January 7, 2008 "Warning Letter" issued to Mr. Thomas Reed and Dr. Dana Reed-Kane as owners of Reed's Pharmacy ("Reed's" or the "Pharmacy") in Tucson, AZ. The Warning Letter accuses Reed's of violating the FDCA's misbranding and "new drug" provisions.

1. Introduction.

Reed's is a "compounding pharmacy" as defined in Thompson v. Western States Med. Or., 535 U.S. 357 (2002) as well as all applicable laws of the State of Arizona. Reed's combines, mixes, or alters ingredients to create prescription medications on the order of a licensed physician when no commercially-available product is suitable for administration to a specific patient. Reed's is in good standing with the laws of the State of Arizona, compounds only upon the order of a licensed physician, and does so only in the ordinary course of its business of compounding at retail. Among the prescription medications compounded by Reed's are non-commercially available hormone replacement therapies containing estriol.

Reed's is an extremely well-respected compounding pharmacy. While founded in 1998, the Reeds have years of dedication, expertise and history invested in caring for patients. From 1979 until 2001, Mr. Reed owned Jones United Drug Company in Tucson, the longest independently run pharmacy in Arizona state history. Dr. Reed-Kane joined her father to open Reed's pharmacy in 1998. Since that time, Reed's has grown in size and provides services ranging from consultations, screenings, diabetic footwear, pain management, women's and men's health as well as veterinary compounding. Reed's Compounding Pharmacy meets and exceeds all State and Federal laws, regulations and standards. Reed's is fully licensed and in good standing under applicable Arizona law.

Reed's is currently undergoing the process of receiving the PCAB Seal of Accreditation. PCAB is a board founded by the American College of Apothecaries, American Pharmacists Association, International Academy of Compounding Pharmacists, National Association of Boards of Pharmacy, National Community Pharmacists Association, National Council of State Pharmacy Association Executives, National Home Infusion Association and the United States Pharmacopeial Convention. To earn this accreditation, Reed's must complete an exhaustive application process; document its written policies; provide an analysis of its quality procedures; and submit itself to an equally exhaustive on-site inspection led by compounding experts. Reed's adheres to the guidelines of USP related to pharmaceutical compounding. Reed's has never been disciplined by the Arizona State Board of Pharmacy, or any other authority, for any reason.

Mr. Reed graduated from the University of Arizona College of Pharmacy with a Bachelor of Science Degree in Pharmacy in 1969 and has been a licensed pharmacist in Arizona since that time. Mr. Reed opened Reed's Compounding Pharmacy to specialize in the field of pharmaceutical compounding. Mr. Reed regularly attends compounding continuing education seminars and consults with patients regarding a variety of compounding therapies. A copy of Mr. Reed's curriculum vitae is attached hereto as Exhibit "A."

Dr. Reed-Kane graduated with her Doctor of Pharmacy degree from the University of Arizona in 1996 and has been a licensed pharmacist in Arizona since 1997. She works with her father, Mr. Reed, and is the creator, founder and co-owner of Reed's. Dr. Reed-Kane has attended dozens of specialty courses in women's health, hormone replacement therapy, as well as coordinated seminars on her own. She speaks to both lay and health care professionals on topics such as menopause, PMS, infertility, osteoporosis and hormone replacement therapy. She has obtained accreditation as a Creighton Model Fertility Care Practitioner and Pharmacist Consultant through the Institute for the Study of Human Reproduction in association with Creighton University School of Medicine in Omaha, Nebraska. She is also an author and has had numerous articles published in the International Journal of Pharmaceutical Compounding. A copy of Dr. Reed-Kane's curriculum vitae is attached hereto as Exhibit "B."

In 2006, both Mr. Reed and Dr. Reed-Kane were awarded The University of Arizona Alumni Association Distinguished Citizen Award. The Distinguished Citizen Award is given to a person(s) in recognition of distinguished service in nonprofit organizations or other outstanding volunteer service. Dr. Reed-Kane was awarded the Tucson Business Edge's 40 Under 40 award in 2007 which honors 40 emerging leaders who have achieved success in business and the Tucson community before turning 40. Recently, Reed's Compounding Pharmacy, Mr. Reed and Dr. Reed-Kane were also nominated for the Arizona Small Business Association's 2008 SASIE (Southern Arizona Smart Inspiring Enterprise) Awards in the category of "Culture and People," which is awarded to companies that promote a positive workplace, with the winner to be announced this March 2008.

The Arizona State Board of Pharmacy has entitled Mr. Reed and Dr. Reed-Kane to perform all duties authorized to a registered pharmacist on active status since their effective licensure dates without any restrictions by a disciplinary order of the Arizona Board. Based upon their knowledge, skill, experience, education and training, they respectfully assert that estriol is essential to the creation of customized hormone replacement therapies. Without estriol, hundreds of thousands of individuals-often women suffering from the effects of menopause-would needlessly suffer.

II. History.

The January 7, 2008 FDA Warning Letter is the first accusation of professional misconduct Reed's has ever received . Reed's treats these accusations very seriously; however, knowing that Reed's openly has been compounding hormone replacement therapies that include estriol for years with no complaint from the FDA or the Arizona State Board of Pharmacy, Reed's must treat the Warning Letter with skepticism. The following timeline relevant to the Warning Letter has been taken into account in evaluating Reed's concerns and this response:

1. To repeat, Reed's has been compounding hormone replacement therapies using estriol for years without any complaint or disciplinary response from the FDA, the Arizona State Board of Pharmacy, or any other authority.

2. In 2004, ten pharmacies filed a lawsuit in the United States District Court for the Western District of Texas, Midland-Odessa District, the Hon. Judge Robert Junell presiding. See Med. Ctr. Pharmacy v. Gonzales, 451 F. Supp. 2d 854 (W.D. Tex. 2006). The pharmacies sought a judicial declaration that compounded preparations, properly defined, are not "new drugs" within the meaning of the United States Food, Drug and Cosmetic Act ("FDCA" or the "Act")

3 . In October 2005, Wyeth, a large manufacturer (as opposed to a pharmaceutical compounder) of menopause drugs, filed a Citizens Petition with the FDA seeking to have certain forms of hormone replacement therapy declared illegal under the Act.

4. On August 30, 2006, the Midland Court ruled that pharmaceutical compounding upon the order of a licensed physician does not create a "new drug" within the meaning of the FDCA, and is therefore legal under the Act.

5. The FDA subsequently appealed the Med. Ctr. Pharmacy case to the United States Court of Appeals for the Fifth Circuit. Significantly, the FDA did not file an application for, nor receive, a stay of the Court's ruling by either Judge June11 or the Fifth Circuit. Further, Wyeth filed an amicus curiae brief on behalf of the FDA in which it advocated illegalization of compounded hormone replacement therapies.

6. Oral argument in the Med. Ctr. Pharmacy appeal was scheduled for and occurred on January 10, 2008. Despite openly compounding hormone replacement therapies for years, Reed's received the Warning Letter dated January 7, 2008 on January 8. Subsequently, on January 9, 2008, the FDA held a closed press conference in which it announced that it was granting Wyeth's citizen petition in part and issuing Warning Letters. In other words, the FDA publicly acquiesced to Wyeth's position on compounded hormone replacement therapies literally the day before oral argument in the case that is currently dispositive of the FDA's authority to even regulate compounded preparations. It is our understanding that no qualified experts on either pharmacy compounding or estriol were permitted access to this press conference so that they could debate the FDA with even a modicum of publicity.

7. After oral argument, the FDA submitted a Fed. R. App. P. Rule 28(j) letter to the judicial panel reviewing the Med. Ctr. Pharmacy case and attaching its favorable response to the Wyeth Citizens Petition and a Warning Letter similar to that received by Reed's, thereby injecting into that proceeding the FDA's view on the use of compounded hormone replacement therapy even though Judge Junell had determined on an undisputed record that some of the Med. Ctr Pharmacy plaintiffs compounded hormone replacement therapies and were perfectly legal operations anyway.

8. To this date, FDA has not submitted any credible evidence that compounded hormone replacement therapy, including preparations containing estriol, is not safe and effective for use by compounding pharmacies. To the contrary, the use of estriol in compounded hormone replacement therapies is well-supported.

In sum, the January 7, 2008 Warning Letter was a proverbial "bolt out of the blue" for both Reed's and, presumably, the six other January 7, 2008 Warning Letter recipients, as well as the many other compounding pharmacies that compound hormone replacement therapies (particularly those containing estriol). Further, it is reasonable to conclude that this action was coordinated with the FDA's appeal of its loss in the Med. Ctr. Pharmacy case, and may even have been coordinated with its public supporter, Wyeth, in acquiescence to the pressure from that large drug manufacturer. With the foregoing in mind, it is reasonable from an objective standpoint to approach the Warning Letter received by Reed's with bona fide skepticism.

III. Response to Specific Claims.

By labeling Reed's compounding of hormone replacement therapies as "misbranded" and/or "new drugs" under the Act, the FDA essentially accuses Reed's of illegal activity. This policy-which the FDA has publicly adopted but simultaneously downplayed-is a disastrous public health decision . Not only do such claims chill the practice of compounding (which even the Government admits is medically necessary), they chill the very study of pharmacy and may even place patients, doctors and insurers in the position of being "aiders and abettors." Further, since the United States Government requires compounding and/or compounding expertise in the Department of Defense, Veterans' Administration, and pays for compounded preparations through Medicare and Medicaid, the Government implicates its own role in perpetuating what it defines as an "illegal act." Further, by perpetuating claims of illegality through the media, the FDA jeopardizes public health while turning a blind eye to its own activities. This is intolerable in a modern, medically advanced nation.

A. Misbranding Under 21 U.S.C. & 321(a).

The Warning Letter begins with the assertion that Reed's website contained "false and misleading" information in its advertisement of compounded hormone replacement therapies. It is from this assertion that Reed's must assume the FDA's position is based purely upon selective internet surveillance, and not the testing, sampling, analysis, or any other form of consultation or experience with Reed's or its hormone replacement therapies.1 Reed's is not, and never will be, an "internet pharmacy." Reed's is not a large-scale, mail-order facility and primarily serves Southern Arizona. Given the gravity of a FDA Warning Letter, Reed's is deeply disturbed that its reputation may be publicly tarnished without any face-to-face meeting or debate regarding the scope of its activities.

First, the Warning Letter accuses Reed's of making "unsubstantiated efficacy claims" related to its compounded hormone therapies. The FDA specifically alleges that Reed's website contains advertisement that is "misleading" and/or "fails to reveal facts material in light of such representations[.]" The representations at issue are expressly stated on page 2 of the Warning Letter. There the FDA identifies three website statements regarding the benefits of hormone replacement therapy with respect to muscle mass and strength; improved sleep, mood, concentration and memory; and the possibility that hormone replacement therapy may prevent senility and Alzheimer's disease . FDA categorically states that it merely "regards" such statements as "false and misleading" simply because the FDA is "not aware of substantial evidence . . . that supports these claims." However, the Warning Letter does not disclose any evidence to the contrary-even after two years' contemplation of Wyeth's Citizens Petition. In other words, the FDA accuses Reed's of making false claims despite any disclosed evidence whatsoever that Reed's website contained statements that were, in fact, false.

While Reed's endorses the beneficial effects of compounded hormone replacement therapy, it does not lie behind the log. Reed's clearly discloses on its website:

The information contained on this site is general in nature and is intended for use as an informational aid. It does not cover all possible uses, actions, precautions, side effects, or interactions of the products shown, nor is the information intended as medical advice or diagnosis for individual health problems or for making an evaluation as to the risks and benefits of using a particular product. You should consult your doctor about diagnosis and treatment of any health problems. Information and statements have not been evaluated by the FDA, nor has the FDA approved the products to diagnose, cure or prevent disease.

See http://reedsrx .com

Second, the Warning letter identifies material on Reed's website that "suggest[s]" that Reed's compounded hormone therapy drugs are superior to other therapies. The FDA emphasizes manufactured FDA-approved drugs as the appropriate comparators, merely because Reed's website states that compounded hormone replacement therapy produces fewer side effects than synthetic therapies on the one hand, and a simple, non-comparative statement that
naturally occurring hormones have very few side effects on the other. The FDA categorically states that such a suggestion is false and misleading. Although Reed's fully endorses the view expressed on its website, the statement at issue is not even specific to Reed's. In other words, FDA has a perception of a suggestion that Reed's specifically claims that its hormone replacement therapies are superior to all other therapies. Reed's is proud of its well-earned
reputation, stands behind its preparations, and its preparations have assisted in the alleviation of suffering in thousands of people; however, that does not excuse FDA from ascribing to Reed's claims it did not make in both a Warning Letter and an attendant press conference.

Third, the Warning Letter takes issue with the term "bio-identical." The FDA states that the term "implies that [Reed's] compounded hormone therapy drugs are natural, or identical to the hormones made by the body" in light of the FDA's lack of awareness of substantial evidence to support such a claim. (emphasis supplied.) According to information received from the International Academy of Compounding Pharmacists ("IACP"):

FDA-approved labeling for Prometrium ®(Progesterone, USP) Capsules states that the synthesized progesterone in this drug is "chemically identical to progesterone of human ovarian origin." Solvay, the manufacturer of this product, notes on its website that Prometrium ® is "Bio-identical to the progesterone that is naturally produced by your own body." www.prometrium.com (last visited Jan 29, 2008). Ascend Therapeutics similarly claims on its website for EstroGel® (estradiol gel) that EstroGel is "bio-identical estrogen replacement therapy that comes from a plant source . . . the estrogen in EstroGel is similar to the one your body produces naturally." www.estrogel.com (last visited Jan 29, 2008).

See King, L.D., IACP Response to FDA Actions Against BHRT (Feb. 5, 2008). Reed's is unaware of any reason for the FDA to ignore such claims when made by drug manufacturers while simultaneously explaining to Reed's, a compounding pharmacy, that such claims are unsupported by "substantial evidence," unless there is a legally significant difference between manufacturers and compounding pharmacies--a position the FDA has publicly rejected.

The only rationale for the FDA's actions is the tacit acknowledgement that the phrase "bio-identical" is, in fact, neither false nor misleading and the FDA is "playing favorites." "Bio-identical" is simply a term that both compounding pharmacies and manufacturers of FDA-approved drugs use to convey that the chemical structure of a component is identical or nearly identical to a substance that occurs naturally in the body. FDA has provided no evidence that the term "bio-identical" impermissibly implies any benefit, as opposed to simply describing an attribute of the product.

Indeed, at the soul of the FDA's Warning Letter is an inappropriate shifting of the burden of proof from the FDA to Reed's to demonstrate "through adequate and well controlled clinical investigations" that its website statements are not "false and misleading" as that phrase is used by the FDA.2 The FDA clearly knows that compounded preparations, properly defined, are incapable of undergoing the multi-million dollar "investigations" required to satisfy the FDA because compounded preparations are prescription- and patient-specific. Further, the FDA clearly knows as a losing party and current appellant in the Med. Ctr. Pharmacy case that FDA authority to regulate compounding pharmacy at all has already been rejected. Even if the FDA will ultimately be held to have regulatory authority over compounded hormone replacement therapy, all that is known or knowable to Reed's is that the only provision of 21 U.S.C. § 352 (under which the FDA accuses Reed's of misconduct) even mentioning compounds is § 352(o), which applies only to drug manufacturers disguised as compounding pharmacies. Given the foregoing, the tenor, accusations and timing of the FDA's Warning Letter and attendant press conference are premature and unduly aggressive, if not wholly inappropriate.

Despite all the foregoing, and contrary to Reed's solid judgment, Reed's has elected to voluntarily suspend the internet statements with which the FDA takes issue. This voluntary suspension is not in any way a concession that the allegations contained in the FDA's Warning Letter have merit. Copies of the pertinent Reed's website pages, before and after receipt of the Warning Letter, are attached hereto as Exhibits "C" and "D." Further confirmation may be obtained by visiting Reed's website at http://reedsrx.com.

B. "New Drug" Claims.

Reed's has never before been accused of creating a "new drug" under the FDCA. Compounded preparations are not "new drugs" under 21 U.S.C. § 321(p) as alleged in the Warning Letter. While claiming that there is "substantial authority" to the contrary, the FDA is well aware that the only case mentioned in the Warning Letter directly addressing whether compounded preparations are "new drugs" is the Med. Ctr. Pharmacy case, which held that they are not.

It is insufficient for the FDA to issue a Warning Letter against Reed's, based on distinguishable authorities cited in the Warning Letter, while ignoring the only authority directly on-point. The FDA is the losing party to a case currently on appeal which says the FDA is flat-out wrong. A federal judge has spoken. The FDA is acting outside its authority and essentially is flaunting the judicial branch of the United States government. 3

Instead, the FDA directs Reed's to FDA Compliance Policy Guide ("CPG") section 460.200 for an enumeration of non-exclusive "factors" that the FDA "considers" in deciding to initiate enforcement actions against compounding pharmacies.4 CPG 460.200 was cited by Judge Junell as one of several bases for holding that compounded preparations are not "new drugs" within the meaning of the FDCA because the CPG emphasizes that the FDCA applies to drug manufacturers, not compounding pharmacies:

The language in CPG 460.200 demonstrates that the FDA draws a line between compounding for an individual patient pursuant to a prescription from a licensed practitioner and compounding that rises to the level of manufacturing. The Court finds this distinction further supports the exemption of compounded drugs from the new drug definitions, if the drugs are created for an individual patient on the basis of a prescription from a licensed practitioner.

Med. Ctr. Pharmacy, 451 F. Supp. 2d at 864.

Despite this inconsistency, the FDA continues to state that Reed's may not compound hormone replacement therapy containing estriol because estriol is not a component of an FDA-approved drug and Reed's has not obtained an FDA-sanctioned investigational new drug application. The FDA apparently asserts that compounded drugs-which are created because no FDA-approved drug is available-must be compounded from an active pharmaceutical ingredient contained in an FDA-approved drug. Reed's questions how and to what extent a compounding pharmacy could reasonably comply with such a mandate and retain its status as a compounding pharmacy, since, by definition, it cannot and will not create analogs of commercially-available FDA-approved drugs. Nor do Reed's compounded preparations require an investigational new drug application. They are incapable of becoming, and not intended to be, ultimate FDA-approved drugs.

Reed's categorically rejects the FDA's accusation that it is compounding "new drugs." The FDA is currently on the losing end of this debate and, until a court of final authority holds otherwise, Reed's will not concede that its compounded preparations are "new drugs" under the Act.

C. Misbranding Regarding Estriol.

The FDA concludes by stating that Reed' compounded preparations containing estriol are misbranded and do not bear adequate directions for their use. Reed's is unaware of any actual FDA inspection or analysis of Reed's preparations5 and cautions the FDA that if it acquired such preparations, it did so surreptitiously without Reed's knowledge that the FDA did not have the required prescription from a duly licensed physician to receive such preparations.

Again, Reed's has been informed by IACP as follows:

Estriol has been approved and marketed for more than 40 years in Europe and Asia for the treatment of post-menopausal symptoms. Such drugs include, for example, Organon's Ovestin and Janssen's Ortho-Gynest. Even Wyeth, which urged FDA to act against estriol-containing BHRT products on grounds that "their sale without prior FDA approval . . . violates the new drug provisions of the Act and poses a serious threat to public health " markets two estriol-containing menopause drugs in Germany called Cyclo-Menorette ® and Estriolsable ®.

(King, L.D., supra) (emphasis in original) (internal citations omitted). Aetna, one of the largest insurance companies in America, currently lists Bio-Identical Hormone Replacement Therapy as one of their current compounding services.6 The IACP letter further reminds the FDA that estriol has been used to treat menopause and other estrogen-deficiency-related conditions since at least 1940-two years after passage of the Act. Id. The bottom line is that it is accepted that estriol is an essential component of scientifically credible compounded hormone replacement therapy. If a hormone-replacement pharmacist cannot use estriol, he or she cannot operate professionally. The FDA's categorical "prove it" belies motives that should be incomprehensible to the entire pharmaceutical industry, whether manufactured or compounded, unless those motives are unassociated with health and the palliation of suffering .

Moreover, the United States Pharmacopoeia includes an estriol monograph. The USP has set standards for drugs for well over a century. The USP establishes official standards for drugs and also establishes official standards for new drugs based upon drug company data. Once standards are developed by the USP, then the FDA enforces them. Federal drug-regulation legislation has encouraged or mandated compliance with USP standards for decades. As a compounding pharmacy, Reed's only compounds preparations in conformance with the USP. The FDA's sudden about-face on the use of estriol does not comport with the FDCA's history, language, mission or intent.

Reed's categorically rejects the FDA's assertion that its compounded preparations containing estriol violate the Act in any way. Further, assuming arguendo that the FDA is ultimately held to have the authority to regulate estriol under the FDCA, the Warning Letter issued against Reed's was deliberately timed to influence a pending court case-a virtual admission that the FDA knows, at a minimum, that the law it cites has been rejected once and is in flux. This constitutes premature and selective prosecution against Reed's, which Reed's challenges.

IV. Request for Publication.

Reed's requests that this Response be posted on the FDA website.

V. Conclusion.

The January 7, 2008 Warning Letter issued by the FDA to Reed's Pharmacy is objectionable, motivationally questionable, and factually and legally incorrect. But, since Reed's is much smaller than FDA's manufacturers, it has voluntarily elected to suspend the internet statements complained of in an effort to secure peace. Otherwise, Reed's categorically rejects the FDA's position with respect to those statements, as well as the FDA's position on compounded hormone replacement therapy generally, or compounds made using estriol specifically.



Terry L. Scarborough

Cc: Mr. Thomas Reed
Dr. Dana Reed-Kane

1 To Reed's, FDA's actions suggest that the FDA either (1) does not wish to discuss this matter with Reed's; (2) does not have the expertise to discuss this matter with Reed's; or (3) simply does not care in light of other FDA priorities.

2 While tangential to this Warning Letter response letter, Reed's questions whether the FDA has the authority to regulate Reed's website statements pursuant to the United States Supreme Court's ruling approving the advertisement of compounded preparations in Thompson v. Western States Med. Ctr., 535 U.S. 357 (2002).

3 The fact that the Med. Ctr. Pharmacy case is on appeal is of no moment, as the government failed to secure a stay of judgment in either the trial or appellate courts. It is bound.

4 Apparently, the FDA entertains additional factors unknown and unknowable to compounding pharmacies.

5 The Warning Letter discloses none.

6 See http://www.aema.com/provider/resource/prescriptions/specialty.html#compounding (accessed 2/20/08).


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