Complex, custom-made medications produced in factorylike pharmacies, including several in Arizona, are distributed to hospitals across the country with almost no state or federal oversight — a loophole dramatized by a deadly 2012 meningitis outbreak linked to tainted steroids from one of those facilities in New England.
That outbreak could just as easily have happened in Arizona or anywhere else. Illnesses and deaths linked to it spread across 20 states.
There is no accurate count of how many of these facilities — in effect, large-scale custom drugmakers that ship to hospitals and doctors offices — exist in the U.S. because they are totally unregulated. And because nobody tracks them, it is unclear how many are in each state or the destinations of their shipments.
At least two in Arizona have been cited in the past six months by the U.S. Food and Drug Administration, one for unsanitary conditions and another for a contaminated injection. Next month, the Arizona State Board of Pharmacy is expected to review the findings of joint state and federal inspections of the facilities in Deer Valley and Mesa.
The nation learned of these shadow drugmakers when an injection formulated at Massachusetts' New England Compounding Center was linked to the meningitis outbreak that ultimately was associated with the deaths of 64 people and illness among 750 others. The outbreak underscored lax regulation of drug-compounding facilities, which manufacture unique combinations of medicines for specific conditions and illnesses.
Since 2012, federal and state officials across the country have struggled to regulate such facilities. A federal law enacted in November as a response to the meningitis outbreak created voluntary regulations for these facilities for the first time, but it remains unclear how many facilities will opt in.
The FDA began cracking down on these facilities, inspecting 42 of the biggest operations in the country in 2013. The two Valley companies cited by the FDA were a part of the push.
Custom drugs, often mixtures of several different medicines, are serving an increasingly important purpose in the pharmaceutical industry, which is facing a drug shortage that, in part, is spurring a trend toward personalized medicine.
Anyone who has taken these drugs likely had a prescription written by a doctor for a unique mixture tailored to specific ailments. The patient may need medication that is out of stock, or need substitute ingredients because of drug allergies.
Everything from human pain-relief creams to hormone pills for dogs can be dispensed to patients who order them online, purchase them at a Walgreens or CVS, or pick them up at a local mom-and-pop apothecary.
By law, the state pharmacy board is responsible for inspecting and regulating smaller-scale compounding pharmacies that serve individual patients. The FDA is responsible for overseeing the licensed drug manufacturers that run large facilities and must meet stringent testing and production requirements.
The custom-drug facilities fall somewhere in between, and they are now the focus of state and federal regulators.
"They are performing a necessary activity in that they are making products that other companies aren't going to make, or in a specific dosage form that will be useful to the hospital. But because they're really operating as a manufacturer, they need to have that regulatory oversight," said Sandra Shire, who teaches in the Regulatory Science Concentration in the Clinical Research Management master's degree program at Arizona State University's College of Nursing and Health Innovation.
"That's what the outbreak brought to light, that there were pharmacies that were participating in manufacturing who were not being regulated as manufacturers and that didn't adhere to current good manufacturing practices," said Shire, a former FDA investigator.
New federal law
Last November, President Barack Obama enacted the federal Drug Quality and Security Act, designed to rein in these large facilities.
The law outlines reporting and inspection requirements and defines the larger compounding facilities that produce sterile drugs as "outsourcing facilities." Those that agree to register under the voluntary new category agree to be held to federal standards for manufacturers.
FDA officials believe roughly 700 to 1,000 facilities are compounding sterile drugs and shipping them to other states. As of May 16, only 42 companies were registered with the FDA as outsourcing facilities under the new law.
Two are located in Arizona — Banner Compounding Pharmacy in Chandler and Avella Special Pharmacy of Deer Valley.
Avella was one of the two Valley facilities cited by the FDA during its 2013 targeted inspections of large compounding facilities. It produces both individual, smaller-scale compounds and larger ones. In a warning letter, FDA inspectors said that Avella was producing a significant number of drug products without valid individual prescriptions and that there were unsanitary conditions in the lab.
Avella recalled two products and registered as an outsourcing facility. Construction has begun for a new sterile pharmacy at the Deer Valley location, which company officials said is the only branch that ships drugs out of state. The company has purchased new equipment and hired an FDA consultant and additional technical staff.
"We looked at is as a chance to improve," said Linda Cappellini, Avella's director of laboratory services.
RxFormulations, based in Mesa, was the other cited by the FDA after inspectors found microbial contamination in a vial of injection medicine. There was "irregularly shaped floating matter" in the unused product, the FDA said. The company recalled the product. Company officials declined to comment.
RxFormulations is not registered under the new law.
FDA officials acknowledged that there is uncertainty over companies that produce sterile compounded drugs but choose not to register as outsourcing facilities.
The program's voluntary nature puts the onus on state and federal regulators to increase communication so that state inspectors can notify the FDA when they find facilities that qualify as outsourcing facilities, said Gabrielle Cosel, drug-safety manager at the Pew Charitable Trusts. The Washington, D.C.-based non-profit supported the federal law's passage.
The law gives large sterile-drug-compounding facilities a regulatory home that has been lacking, and hospitals and clinics now have a choice to purchase drugs from an FDA-approved facility, Cosel said.
Regulators and pharmacy-industry experts hope the market will drive more facilities to register as outsourcing facilities and weed out some of the bad actors.
Although it can be a costly initial investment, registering as an outsourcing facility could have long-term benefits for the compounder, Shire said. Hospitals may prefer to contract with registered facilities over unlicensed operations to decrease their liability.
State oversight
While experts agree that the law is a crucial first step in holding sterile-drug compounding operations accountable, even supporters of the law acknowledge that questions linger over how it will play out. The FDA has not yet released guidelines that could answer some remaining questions.
It is clear that large outsourcing facilities are under federal jurisdiction and that small traditional pharmacies are under state jurisdiction. But it is unclear who would regulate those that produce both types of drugs, which would fall under both state and federal watch, said Chris Topoleski, director of federal regulatory affairs at the Maryland-based American Society of Health-System Pharmacists, which supported the new federal law.
"I think an area where there will be a little bit more clarification needed will be for those entities that are registered as pharmacies and do a fair amount of sterile compounding — kind of a dual operation," Topoleski said.
State boards do not yet know how much authority they would have in overseeing outsourcing facilities. The law requires state regulators to alert the FDA of any state warnings, enforcement actions or any concerns they have with existing or potential outsourcing facilities.
Outsourcing facilities are not required to be licensed by the state as a pharmacy. So, in states like Arizona, state regulators would not have oversight over such facilities unless a new category was added to state law.
The uncertainty has prompted state pharmacy boards across the country to push their legislators to create laws and rules that would give state regulators some authority over outsourcing facilities.
At a national conference in Phoenix last week, board leaders shared the status of efforts in respective states and said they wanted to see some uniformity in state involvement.
Regulators from Idaho, Minnesota, Nevada, Texas, Virginia and other states said they want to see their state lawmakers adopt similar definitions for outsourcing facilities and allow states to inspect the facilities along with federal regulators.
Definitions and laws in place at the state level are especially important given that outsourcing facilities make interstate shipments, and standards should be in place to keep all the facilities in check, they said.
There is no clear chain of command in the federal law's provisions, and state boards are advocating for clarity, said Carmen Catizone, executive director of the National Association of Boards of Pharmacy.
Legislators from states across the country are beginning to pay attention, especially in light of the New England outbreak, Catizone said. There needs to be leadership among state legislators to figure out state authority and make resources available for state regulators, he said.
"Unfortunately, what we hear all the time in the legislature is, 'Show me the dead bodies,' " Catizone said. "We have the dead bodies, and we should not have had those dead bodies in the first place."
