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U.S. Department of Health and Human Services

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Federal and State Role in Pharmacy Compounding and Reconstitution: Exploring the Right Mix to Protect Patients


Statement of

Steven K. Galston, M.D., M.P.H., Acting Director
Center for Drug Evaluation and Research
U.S. Food and Drug Administration
Department of Health and Human Services

before

the Senate Committee on Health, Education, Labor, and Pensions

October 23, 2003

INTRODUCTION

Mr. Chairman and Members of the Committee, I am Steve Galson, the Deputy Director of the Center for Drug Evaluation and Research at the Food and Drug Administration (FDA or the Agency). I am also the Acting Director of the Center while Dr. Janet Woodcock is on detail to the Office of the Commissioner.

I appreciate the opportunity to discuss FDA’s role with regard to pharmacy compounding. In my testimony, I will discuss the Agency’s activities and strategies for addressing public health issues associated with pharmacy compounding. I will touch on our current statutory and regulatory authority, how the Agency has exercised that authority, and our future plans in this area.

BACKGROUND

By most estimates, pharmacy compounding is a growing business. Many compounding pharmacies have established Internet web sites to promote and sell their products. The Agency’s strategies for addressing pharmacy compounding have had to evolve to respond to the public health challenges associated with this growing area while at the same time preserving the benefits that pharmacy compounding offers in meeting a public health need.

FDA views traditional pharmacy compounding as the combining, mixing, or altering of ingredients to create a customized medication for an individual patient in response to a licensed practitioner’s prescription.1 In its simplest form, it may involve taking an approved drug substance and making a new formulation to meet the medical needs of a specific patient. For example, it may involve formulating the product without a dye or preservative in response to a patient allergy. Or it might involve making a suspension or suppository dosage form for a child or elderly patient who has difficulty swallowing a tablet or a capsule. These traditional forms of pharmacy compounding are an important component of our pharmaceutical armamentarium. Although these products technically may be considered unapproved new drugs because they differ from the approved formulation of the drug, FDA has exercised enforcement discretion to allow these legitimate forms of pharmacy compounding, which are regulated under state laws governing the practice of pharmacy.

We believe that the vast majority of pharmacies engaging in pharmacy compounding provide a valuable medical service that is an integral part of our modern health care system. However, we have become aware of instances involving compounding in which the risks of obtaining a product of substandard quality may outweigh the benefits of obtaining the compounded drug. In addition, we have seen abuses, such as large-scale drug manufacturing under the guise of pharmacy compounding.

In recent years, we have witnessed some compounding pharmacies creatively marketing new compounded products that they assert are “better” than available therapies. We are not aware of data supporting these claims. Sometimes these pharmacies compound a product containing a form of an active ingredient that has not been approved by FDA, such as 4-aminopyridine, an experimental drug compounded for patients with multiple sclerosis. In other instances, drugs are compounded even though FDA has removed them from the market after determining that they were unsafe. We also have seen drugs compounded that are essentially copies of commercially available products. Compounding pharmacies then sell these copies for less than the approved commercially available product. These appear to be compounded for economic reasons rather than genuine medical need. In such cases, we believe the consumer would be better served by the commercially available drug, which has been determined to be safe and effective and manufactured under rigorous good manufacturing practice requirements.

Although there is limited hard data on the actual amount of pharmacy compounding that is occurring in this country, pharmacy compounding appears to be a big and growing business. In April 2001, we commissioned a study on the compounding industry by the Eastern Research Group, Inc. According to their August 2001 report, over 650 pharmacies fill more than 13 million prescriptions for compounded products per year. Although many more pharmacies compound (some estimates put the number at more than 3,000 compounding pharmacies) this relatively small number of pharmacies that specialize in compounding appear to account for a majority of the drugs compounded nationally. Some estimate that compounding represents one percent of all of the prescriptions filled each year. In 2003, according to one estimate, this would amount to 30 million prescriptions for compounded products. In some cases, these prescriptions may be compounded in pharmacies that dispense only compounded medications or in other pharmacies for which compounding is a large percentage of their business.

Pharmacy compounding, by definition, involves making a new drug whose safety and efficacy have not been demonstrated with the kind of data that FDA ordinarily would require in reviewing a new drug application.2 Although most pharmacists are well-trained and well-equipped to safely compound certain medications, not all pharmacists have the same level of skills and equipment, and some products that are compounded may be inappropriate for compounding. In some cases, we have reason to be concerned about the quality of the drugs being compounded and the potential risks to patients who may take them. In some instances, compounders may lack sufficient controls (equipment, training, testing, or facilities) to ensure product quality or to compound difficult products such as sterile or modified release drugs. If compounding is done on a large scale and is not done properly, compounders can expose large numbers of patients to health risks associated with unsafe or ineffective medications. This may be of

particular concern if patients are taking an ineffective compounded product in lieu of a proven therapy. In addition, compounding large quantities of drugs and copying commercially available approved products in compounding pharmacies circumvents important public health requirements and undermines the drug approval process – the evidence-based system of drug review that consumers and health professionals rely on for safe and effective drugs.

RECENT ENFORCEMENT ACTIVITY

The following examples of recent FDA enforcement actions against compounding pharmacies illustrate some of these concerns:

Fentanyl “Lollipops”: In August 2002, during in a joint FDA/New Hampshire inspection, FDA determined that a pharmacy was compounding Fentanyl “Lollipops” and dispensing them without the labeling and other packaging and patient safety features required by FDA for the approved product. Fentanyl is a narcotic analgesic that could pose a safety hazard to children if distributed without appropriate safety measures. FDA issued a “warning letter” to the firm and the firm agreed to cease distribution of this product.

Methylprednisolone Acetate: In September 2002, a compounding pharmacy in South Carolina recalled all lots of its methylprednisolone acetate products based on reports of four patients who developed a rare fungal infection after taking the drug. Ultimately, a total of six patients were infected, and one died. A joint FDA/South Carolina inspection revealed that the firm did not have adequate controls over its compounding operations to ensure the necessary sterility. When the firm refused to voluntarily recall other injectable products or to provide FDA with a complete list of all products distributed, FDA issued a nationwide alert on all injectable drugs prepared by the firm. FDA is aware of several other cases of contamination and adverse events associated with compounded sterile injectable products.

Large Volume Interstate Shipments: In September 2002, FDA issued a “warning letter” to a California pharmacy after it determined during a joint FDA/California inspection that the firm was not operating as a retail pharmacy. The firm was using commercial scale manufacturing equipment and making large quantities of drugs for shipment across California and to patients in other states. In March of 2002, the firm issued a recall of compounded inhalation solutions due to microbial contamination.

In each of these cases, as is the case in most pharmacy compounding actions, FDA has proceeded jointly with the state in which the pharmacy is located. In many of the cases, however, questions have arisen concerning FDA’s authority over the compounding activities. In some cases, FDA had difficulty obtaining access to the compounding pharmacy to determine whether the firm was engaging in dangerous practices. The pharmacies argued that they were not subject to FDA regulation because they were compounding pharmacies. FDA had to get a warrant to obtain access to the facilities and records of compounding activities. One of these incidents is discussed in more detail below.

Wedgewood Village Pharmacy: On July 7, 2003, a U.S. Magistrate Judge in the U.S. District Court of New Jersey denied Wedgewood Pharmacy’s motion to quash FDA’s warrant for administrative inspection of the pharmacy. The warrant application was filed after the U.S. Drug Enforcement Agency’s (DEA) requested assistance from FDA in conducting an on-site inspection of Wedgewood.

The Magistrate Judge held, in part, that (1) FDA had authority to apply for a warrant to inspect the pharmacy; (2) it is not FDA’s burden to prove that the entity it seeks to inspect is not entitled to the pharmacy-related exemptions from FD&C Act; and (3) the Compliance Policy Guide stating that FDA would not attempt to regulate traditional pharmacy compounding practices was a reasonable interpretation of the FD&C Act. The pharmacy owner appealed to the District Court Judge the magistrate’s order denying the motion to quash the administrative inspection warrant. The District Court held a hearing on October 16, 2003. A ruling in this case is pending.

Because FDA was not permitted to complete its inspection in this case and several others, the Agency has been delayed, from obtaining the evidence needed to assess whether drug manufacturing is occurring under the guise of compounding or if compounding practices that raise public health concerns are present.

STATUTORY AND REGULATORY AUTHORITY

Although compounding was widespread when the FD&C Act was first enacted in 1938, there were no provisions specifically dedicated to compounding, as distinguished from manufacturing of drugs. After the 1962 amendments to the Act expanded the universe of drugs that require FDA pre-market approval to include drugs that are not already generally recognized by experts as effective, courts have interpreted expansively the Act’s provisions to require pre-market approval of virtually all prescription drugs. It is widely recognized, however, that compounded drugs could not meet the approval requirements, in part because they traditionally are made in small amounts for individual patients according to a prescription. In addition, it is usually not feasible to study them in clinical trials to establish their safety and efficacy or prepare new drug applications for all of the different types of compounded products that might be prescribed.

Several of the Act’s provisions that pertain to drugs generally include compounded drugs. The specific statutory provisions that may apply to compounded drugs are: (1) the definition of “drug” (section 201(g) of the Act); (2) the misbranding and adequate directions for use requirements for drugs (section 502 of the Act); (3) the adulteration and current good manufacturing practice (cGMP) requirements for drugs (section 501(a)(2)(B) of the Act); and (4) the new drug approval provisions (section 505 of the Act). Literal application of these statutory drug authorities could mean that, technically, virtually all compounded drugs violate the Act, despite the long history of allowing certain types of compounding and the important public health benefits provided by such compounding of medically necessary drugs that are not otherwise available. Until the 1997 provision discussed below, Congress had not explicitly exempted compounded drugs from the preceding requirements of the Act.

Today, the Act does specifically address compounding in two specific provisions; the registration provisions and the inspection provisions. In each case, it provides an exemption that is narrowly tied to the specific requirements of those two provisions. Under the requirements for drug registration, although compounding is specifically included among the activities that would require an establishment to register with FDA (section 510(c) of the Act), an exemption is provided for pharmacies that, among other conditions, do not compound for sale “other than in the regular course of their business of dispensing or selling drugs . . . at retail” (section 510(g)(1) of the Act). The same language limits the types of records that FDA may review during an inspection of a pharmacy (section 704 of the Act).

Because these exemptions do not extend to other statutory requirements, such as pre-approval requirements that would significantly restrict compounding, FDA has historically exercised its enforcement discretion in a manner that defers to the states, as the regulators of the practice of pharmacy, to serve as the primary regulators of the practice of pharmacy compounding. FDA’s focus in recent years has been on drug manufacturing that operates under the guise of pharmacy compounding. FDA also has worked cooperatively with the National Association of Boards of Pharmacy (NABP) and the U.S. Pharmacopeial Convention (USP) to address good compounding practices, and with the states on a case-by-case basis to address instances of compounding that raise public health and safety issues.

Compliance Policy Guide of 1992 

In March 1992, FDA issued a compliance policy guide (CPG), to delineate the Agency’s enforcement policy on pharmacy compounding. This CPG relied on the exercise of enforcement discretion rather than legal exemptions from new drug and other statutory requirements. The pharmacy community expressed concerns about how FDA intended to exercise its enforcement discretion and sought legislation to clarify the boundaries of FDA’s authority over pharmacy compounding. In 1997, Congress enacted the Food and Drug Administration Modernization Act of 1997 (FDAMA) to specifically addressed FDA’s role in the regulation of pharmacy compounding.

Food and Drug Administration Modernization Act of 1997 

On November 21, 1997, the President signed FDAMA (P.L. 105-115). Section 127 of FDAMA added sections 503A to the FD&C Act, to clarify the status of pharmacy compounding under Federal Law. Under section 503A, drug products that were compounded by a pharmacist or physician on a customized basis for an individual patient were entitled to exemptions from three key provisions of the Act: (1) the adulteration provision of section 501(a)(2)(B) (concerning the good manufacturing practice requirement, or cGMP); (2) the misbranding provision of section 502(f)(1) (concerning the labeling of drugs with adequate directions for use); and (3) the new drug provision of section 505 (concerning the approval of drugs under new drug or abbreviated new drug applications). To qualify for these exemptions, a compounded drug product was required to satisfy several requirements, some of which were to be the subject of FDA rulemaking or other actions. Section 503A of the Act took effect on November 21, 1998, one year after FDAMA was signed into law.

Thompson v. Western States Medical Center

In November 1998, the solicitation and advertising provisions of section 503A were challenged by seven compounding pharmacies as an impermissible regulation of commercial speech. The U.S. District Court for the District of Nevada ruled in the plaintiffs’ favor. FDA appealed to the U.S. Court of Appeals for the Ninth Circuit. On February 6, 2001, the Court of Appeals declared section 503A to be invalid in its entirety (Western States Medical Center v. Shalala, 238 F.3rd 1090 (9th Cir. 2001)). The government petitioned for a writ of certiorari to the U.S. Supreme Court for review of the Ninth Circuit’s decision that the solicitation and advertising provisions of section 503A were unconstitutional restrictions on commercial speech. The Supreme Court granted the writ and issued its decision in the case on April 29, 2002.

The Supreme Court affirmed the Ninth Circuit’s decision that section 503A of the FD&C Act was invalid in its entirety because it contained unconstitutional restrictions on commercial speech (i.e., prohibitions on soliciting prescriptions for and advertising specific compounded drugs). The Court did not rule on, and therefore left in place, the Ninth Circuit’s holding that the unconstitutional restrictions on commercial speech could not be severed from the rest of section 503A. Accordingly, all of section 503A is now invalid.

Compliance Policy Guide of May 2002 

Once the statutorily created exemptions from the new drug, misbranding and adequate directions for use requirements were deemed invalid for compounded drugs, FDA determined that it needed to issue guidance to the compounding industry on what factors the Agency would consider in exercising its enforcement discretion in this area under current law. In May 2002, FDA issued a Guidance for Industry – Pharmacy Compounding – Compliance Policy Guide, which is based on the CPG of March 1992.

The guidance states that FDA recognizes that pharmacists traditionally have extemporaneously compounded and manipulated reasonable quantities of drugs upon receipt of a valid prescription for an individually identified patient from a licensed practitioner. This traditional compounding activity is not the subject of the guidance.

However, when the scope and nature of a pharmacy’s activity raise the kinds of concerns normally associated with a drug manufacturer and result in significant violations of the new drug, adulteration, or misbranding provisions of the FD&C Act, the guidance states that FDA will consider enforcement action. In determining whether to initiate such an action, the guidance states that the Agency will consider whether the pharmacy engages in any of the following acts:

  1. Compounding, except in very limited quantities, of drugs in anticipation of receiving prescriptions in relation to the amounts of drugs compounded after receiving valid prescriptions.
  2. Distributing inordinate amounts of compounded products out of state.
  3. Compounding finished drugs from bulk active ingredients that are not components of FDA-approved drugs without an FDA sanctioned investigational new drug application (IND) that is in effect in accordance with section 505(i) of the Act and 21 CFR 312.
  4. Receiving, storing, or using drug substances without first obtaining written assurance from the supplier that each lot of the drug substance has been made in an FDA-registered facility.
  5. Receiving, storing, or using drug components not guaranteed or otherwise determined to meet official compendial (USP monograph) requirements.
  6. Using commercial scale manufacturing or testing equipment for compounding drug products.
  7. Compounding drugs for third parties who resell to individual patients or offering compounded drug products at wholesale to other state-licensed persons or commercial entities for resale.
  8. Compounding drug products that are commercially available in the marketplace or that are essentially copies of commercially available FDA-approved drug products. In certain circumstances, it may be appropriate for a pharmacist to compound a small quantity of a drug that is only slightly different than an FDA-approved drug that is commercially available. In these circumstances, FDA will consider whether there is documentation of the medical need for the particular variation of the compound for the particular patient.
  9. Failing to operate in conformance with applicable state law regulating the practice of pharmacy.

The above list of factors is not intended to be exhaustive, as other factors may be appropriate for consideration in a particular case.

Although the CPG was immediately effective when it was issued in May 2002, the Agency indicated it would be interested in receiving public comments on the guide. FDA received public comments and is in the process of revising the CPG in response to the comments. The Agency plans to publish a new draft of the CPG and will seek comments on it.

LIMITED FDA SURVEY OF COMPOUNDED DRUG PRODUCTS

Since 1990, FDA has become aware of more than 55 product quality problems associated with compounded products, many of which resulted in product recalls. In 2001, FDA’s Division of Prescription Drug Compliance and Surveillance conducted a limited survey of drugs compounded by 12 compounding pharmacies that allowed compounded products to be ordered over the Internet. The goal of the survey was to gather information on the quality, purity, and potency of compounded drug products in the marketplace. The compounded products surveyed were selected from a cross-section of commonly compounded dosage forms based on FDA’s assessment of the potential health risks resulting from improper compounding. FDA collected the samples via air mail order in the same manner a consumer would order the products over the Internet.

The 29 products sampled included hormonal products, antibiotics, steroids, anesthetics and drugs to treat glaucoma, asthma, iron deficiency anemia, and erectile dysfunction. Five different dosage forms (i.e., sterile injectables, ophthalmic products, pellet implants, inhalation products, and oral dosage forms) were sampled.

Ten (34 percent) of the 29 sampled products failed one or more standard quality tests performed. Nine with failing analytical results failed assay (potency) testing, with a range of 59 percent to 89 percent of expected potency.

Each year, FDA routinely samples drug products made by commercial manufacturers and analyzes these samples in FDA laboratories. More than 3,000 products from commercial manufacturers have been sampled and analyzed by FDA since fiscal year 1996. The analytical testing failure rate for commercially produced samples has been less than two percent for all tests, but for assay (potency) tests there were four failures out of 3,000. Compared to the two percent failure rate, the percentage of sampled compounded products failing analytical testing in our 2001 survey (34 percent) was higher than expected. Although the 2001 survey had several limitations including a small sample size, it provided valuable preliminary information on the quality of selected compounded drug products currently marketed. We believe that these laboratory results need to be interpreted cautiously and should not be generalized beyond the particular drugs and pharmacies involved. Further, we believe that the results call for additional study and consideration by FDA, the state regulatory authorities, professional organizations, and pharmacies.

OUTREACH ACTIVITIES

FDA has interacted on many occasions with stakeholders involved with pharmacy compounding. We have attended the annual meetings of the International Academy of Compounding Pharmacists participating on panels with representatives of the American Pharmacists Association (APhA), NABP, the USP, the National Association of Community Pharmacists, and others. In addition, we met separately with many of these stakeholders seeking to find common ground in how to approach the regulation of pharmacy compounding. We have participated in stakeholder meetings sponsored by the USP to address various initiatives including the accreditation of pharmacies that compound medications.

POSITIVE ACTIONS AND CHALLENGES

Some of the stakeholder groups with whom we have interacted are engaged in activities intended to provide greater confidence in the quality of compounded medications. For example, the NABP has a model code governing pharmacy compounding that substantially has been adopted by ten states. The model code provides State Boards of Pharmacy with a framework for developing requirements for compounding pharmacies. The USP has developed a new chapter in the U.S. Pharmacopeia addressing sterile drug compounding practices. The chapter sets standards for the preparation of sterile compounded drugs. The American Society of Health-System Pharmacists also has such guidelines. The APhA, NABP, and USP have been discussing the possibility of developing an accreditation program that would set standards for and monitor compounding pharmacies. All of these activities are positive steps in ensuring that pharmacy compounding is done with appropriate protections for patients, and we support them.

FDA recognizes that states have the direct ability to regulate pharmacy compounding and direct access to prescription records. However, limited state resources and varying standards and regulatory requirements are factors that affect the adequacy of state regulation. Pharmacy self-inspection is allowed in four states, which consists of pharmacist self-evaluation by questionnaire of the pharmacy’s compliance with laws and regulations. In addition, there is variability in commitment to regulate pharmacy compounding among the states. Sometimes there is conflict between State Boards of Pharmacy and Health Departments based on disparate regulatory philosophies.

Clearly, when pharmacy compounding more closely approximates commercial manufacturing, FDA has an interest in regulating that practice as it does all other drug manufacturing. One difficult issue is where to draw that line. If the line is to be drawn based on volume, how much volume makes a compounder a manufacturer? There are many large compounding pharmacies, some of which are exclusively drug compounders. Similarly, there are many small drug manufacturers that make drugs under approved new drug or abbreviated new drug applications. Through our review of these applications, we ensure that the drugs are safe and effective and that the processes by which the drugs are made produce consistently high quality products that maintain their safety and efficacy throughout their shelf life. This system of evidence-based medicine provides public health benefits to American consumers and health professionals because patients are able to rely with confidence on the medications they take and avoid ineffective therapies or those for which the risks do not exceed the benefits.

It is important to ensure that the production of drugs in pharmacy compounding does not undermine the incentives to develop and submit new drug applications to FDA with evidence of the safety and efficacy. At the same time, we recognize that pharmacy compounding is necessary where there is a medical need of a particular patient for a product that is not commercially available in an approved form. We must exercise our regulatory authority in such a way as to support pharmacy compounding that is necessary, while curbing abuses.

With this in mind, we can describe a few key areas where the Agency has taken action and where we believe a Federal role is appropriate:

  • First, as a result of FDAMA, we developed a list of drugs that were inappropriate for compounding because they have been withdrawn from the market for safety reasons. In many cases, FDA reviewed the data concerning adverse events from our spontaneous reporting system and other databases and determined that the risks for these drugs exceeded the benefits for the uses to which they were approved. FDA has access to nationwide and global data concerning adverse events and we have the expertise to evaluate the risks of a therapy in relation to its benefits. Once FDA has determined that the risks of a therapy exceed its benefits to the extent that the drug should be removed from the market, it would be inappropriate to expose patients to the risks of the product by allowing compounding of that drug. FDA intends to continue to maintain this list and take action against pharmacies that compound unsafe products. Similarly, if FDA has specific information about significant potential risks associated with compounding a particular drug (e.g., one that was considered for but denied FDA approval), FDA may take action against such compounding, preferably in support of, or in conjunction with, the state authorities. Furthermore, FDA has continuing concerns about compounding, without an investigational new drug application in effect using ingredients that are “experimental” or not components of FDA approved drugs.
  • Second, FDA believes it is in the best position to address the quality of bulk drug substances used in compounding. Many of these drugs are imported from abroad and individual states are unlikely to have the ability to conduct inspections of foreign producers and ensure the quality of these active ingredients in compounded products. As addressed in the CPG, drugs should not be compounded using active ingredients that were manufactured at facilities that are not even registered with FDA or that fail to meet accepted USP compendial standards for quality.
  • Third, FDA believes it is appropriate for the Agency to continue to investigate allegations of poor quality compounded drugs, in conjunction with the states, whenever possible. However, we also must act without states when state involvement is not forthcoming because of resource constraints or for other reasons. For example, an Internet or mail order pharmacy might be operating in a state with few resources for pharmacy inspections, but shipping poor quality compounded products nationwide. In such cases, FDA believes it plays an important role in addressing these dangerous practices. FDA believes that when issues regarding the quality of compounded drugs are significant enough to raise public health issues, FDA should continue to play a role in working with the states to address these public health matters, and in the event that a state is unwilling or unable to join FDA, then the Agency in some cases must be allowed to unilaterally protect the public health from compounded drugs that pose unreasonable risks.
  • Finally, the Agency should be able to determine when a pharmacy crosses the line between appropriate pharmacy compounding and manufacturing.

CONCLUSION

In summary, FDA welcomes this Committee’s interest in pharmacy compounding and would like to assure the Committee that the Agency’s efforts to address pharmacy compounding issues are designed to balance the need to allow legitimate forms of pharmacy compounding with the need for Federal oversight when pharmacy compounding threatens to compromise public health.

This concludes my testimony, Mr. Chairman. I will be glad to answer any questions you may have.

FOOTNOTES:

1 Under the compounding-related provisions of the Food and Drug Administration Modernization Act, pharmacy compounding was not defined to include mixing or reconstituting commercial products in accordance with the manufacturer’s instructions or the product’s approved labeling. Reconstituting means the return, usually by adding liquid, of a drug previously altered for preservation and storage to its original state for administration to a patient. This type of manipulation, when done in accordance with approved labeling, should not adversely affect the safety or efficacy of the drug. (The provisions were struck down by the Supreme Court on April 29, 2002.)

2 In some cases, it may simply involve taking an approved drug and making a new formulation.