United States: BIG PHARMA(cies) Are Drug Manufacturers: The Pharmacy Compounding Quality Act Of 2013

This is not the first time Congress has enacted law to attempt to regulate compounding pharmacies as drug manufacturers, but it may be the first that doesn't suffer from a crippling constitutional defect. It has taken more than ten years and a significant human tragedy to refocus the attention of Congress, but on November 19, 2013 the Senate approved H.B. 3204 and sent the Drug Quality and Security Act to the President for signature. Under Title I, the "Compounding Quality Act" (the Act) amends the Food Drug and Cosmetic Act ("FDCA") by inserting a new section, 21 USC 353b.  According to Senator Michael Bennet, "[t]he legislation strikes unconstitutional provisions in current law, resolving the patchwork of current federal regulation and applying a uniform standard nationwide." (See here).
The "unconstitutional provisions" relates to the "advertising and promotion" provisions having been declared unconstitutional in Thompson v. Western States, 535 US 357 (2002). Confusion concerning the status of the law was compounded because the Supreme Court did not rule on whether the unconstitutional provision was severable. In Thompson v. Western States, the Ninth Circuit struck the entire Pharmacy Compounding provision while the Fifth Circuit took a different view in Medical Center Pharmacy v. Mukasey, 536 F.3d 383 (5th Cir. 2008) ruling the advertising prohibitions were severable. (See our prior post here).
Congress has not rewritten the entire law nor supplanted state oversight of pharmacy practice; instead, it has revived the former "pharmacy compounding" provisions in section 353a by deleting the prohibition against soliciting prescriptions in subsection (a) and deleting the "advertising and promotion" provision in subsection (c) in their entirety.

Big Pharma(cies) - The 5% Rule

The Compounding Quality Act returns the state of the law to 2002 by imposing the limitations for "inordinate amounts" and "5%" under 353a(b)(3)(B)(i-ii). Under 353a(b)(1)(D) "a drug product may be compounded" if the pharmacist (or physician) "does not compound regularly or in inordinate amounts...any drug products that are essentially copies of commercially available drug products." The Act excludes compounded products "made for an identified individual patient, which produces for that patient a significant difference, as determined by the prescribing practitioner." The phrase "inordinate amounts" is to be defined by the FDA. If the product does not comply with these provisions, it will be subject to the requirements for new drugs.  
The 5% limitation provides that a pharmacy may not compound a "drug product" (i.e. it must comply with the new drug requirements) unless

(i) state where the drug is compounded has a memorandum of understanding with the FDA for state investigations of complaints relating to "compounded drug products" distributed out of state; or
(ii) total compounded products distributed out of state do not exceed 5% of the total prescription orders.  

In the past, the FDA has stated that "when the scope and nature of a pharmacy's activities 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 Act, FDA has determined that it should seriously consider enforcement action."

Outsourcing Facilities:

The Act establishes and regulates a discrete class of pharmacies now known as "outsourcing facilities."  Outsourcing Facilities are defined as those engaged in the compounding of sterile drugs that register with the FDA. An outsourcing facility may compound without obtaining prescriptions for identified individual patients.

Fees

An outsourcing facility is required to register annually, pay a $15,000 registration fee (unless if they have under $1M in sales, in which case they pay $5,000) and report to the FDA in June and December of each year, identifying the drugs compounded. Not "electing" to be an outsourcing facility subjects the facility producing sterile preparations to the rules on misbranding and new drugs.

Inspections

The FDA will conduct what are termed "risk-based" inspections under 21 USC 374. These inspections are the same as those for traditional drug manufacturers. The registration fee or "establishment fee" covers the cost of an inspection but the fee for each successive reinspection is $15,000. 

Records Retention and Production

The new law also subjects outsourcing facilities to the records retention and adverse event reporting requirements under Subpart D of the regulations (21 CFR 310.305) as traditional drug manufacturers. The failure to comply with the reporting requirements is considered a "prohibited act" subject to civil and criminal penalties under 21 USC 331.

Labeling – Misbranding:

The Act amends the drug misbranding provisions under 21 USC 352 to include compounded drugs. Borrowing from the rules governing approved drugs, a compounded drug is misbranded under the FDCA "if the advertising or promotion of a compounded drug is false or misleading in any particular."
The new Compounding Quality Act paves the way for increased use of the FDA's 2002 Compounding Policy Guide (CPG) for oversight of the promotion of pharmacy compounding products for both sterile and other compounded products. CPG Sec. 140.100 addresses the circumstances under which the FDA will seize books and other materials that constitute misleading labeling and states:

Printed material that promotes the use of a product is labeling within the meaning of the Act. Notwithstanding certain free speech protections, labeling including books can be regulated if it is false or misleading. 

The Act Is Silent On Promotion:

The controversy over the pharmacy compounding provisions stems from the Supreme Court ruling in Western States.  Congress purports to cure the First Amendment constitutional infirmity by simply ignoring it. Congress again fails to provide the FDA with a road-map on how to regulate communications or product labeling. In enforcing the FDCA, the FDA assumes that a fundamental distinction exists under the First Amendment between truthful information and information the government declares "false," which is not entitled to protection. While the terms "false" and "misleading" are generally defined in the regulations (21 CFR 202.1), the FDA echoes the Supreme Court in Jacobellis v. Ohio, 378 U.S. 184 (1964) that "it knows it when it sees it."

Rules Not Guidance to Be Issued:

Significantly, Congress has directed the FDA to issue regulations (not guidance) governing pharmacy compounding but no deadline was set for publication of proposed rules. How the FDA will rein in the burgeoning business of non-sterile compounding will need to await formal rulemaking. In the meantime, the FDA has broad and sweeping new powers to treat pharmacies as drug manuf

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