For decades there has been an unanswered question hanging over compounding pharmacies and, for that matter, federal regulators: are compounded prescriptions subject to the “new drug” requirements of the federal Food, Drug and Cosmetic Act (FDCA)? The answer has emerged recently in some federal court decisions and that answer is: yes, but . . . (and the “but” is a big one, as this article explains).
Some background is helpful. In 1938, Congress enacted the FDCA (21 U.S.C. §§ 301-397). It requires FDA approval of a “new drug,” defined as “[a]ny drug (except a new animal drug …) the composition of which is such that such drug is not generally recognized … as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling thereof.” The FDCA also covers new animal drugs in much the same way.
Advanced FDA approval of new drugs is time consuming and inordinately expensive. To subject compounds to this process would be, in effect, to outlaw them, as no pharmacy has the resources or patience to comply with pre-market testing and approval, which can cost millions and take years. For that reason, and fortunately for pharmacies and their patients, FDA pretty much let compounds alone for half a century.
This relatively peaceful coexistence changed in March 1992, when FDA published Compliance Policy Guide No. 7132.16 (CPG 7132.16). While such guides are not law, the FDA enforces them as if they are. This agency rule asserted FDA’s position that its authority extended to compounds, which in FDA’s view were subject to the new drug, adulteration and misbranding provisions of the FDCA. The reason advanced by FDA for the change in policy was FDA’s concern that a few compounders were making an end run around the FDCA by buying in bulk, compounding in advance of receiving a prescription, and marketing the finished compounds to doctors and patients. To the FDA, this looked more like manufacturing than traditional compounding, and there has never been any question about FDA’s authority to regulate drug manufacturers.
Compounders and those advancing the profession disagreed, insisting that compounds were exempt from these onerous FDCA requirements and that FDA had no legal authority to regulate them. The only reason an all-out war did not ensue was language in CPG 7132.16 that indicated that FDA intended to continue to rely on the traditional controls over compounding (state and local regulation of pharmacies), but it reserved the right to go after anyone it believed was manufacturing instead of compounding. To distinguish the two, CPG 7132.16 listed nine characteristics it would evaluate in deciding whether to pursue enforcement. For example, “compounding, regularly, or in inordinate amounts, drug products that are commercially available in the marketplace and that are essentially generic copies of commercially available, FDA-approved drug products” or “compounding inordinate amounts of drugs in anticipation of receiving prescriptions in relation to the amounts of drugs compounded after receiving valid prescriptions” were two practices likely to land a pharmacy on the FDA watch list.
Congress entered the fray, and is so often the case things just got more complicated. Congress passed the Food And Drug Modernization Act of 1997 (“FDAMA”), (codified as amended in 2000 at 21 U.S.C. § 353a) and the Animal Medicinal Drug Use Clarification Act of 1994 (“AMDUCA”) (codified as amended at § 360b(a)(4), (5)). These two new laws made significant changes to the existing FDCA. Court challenges began soon after passage.
Ten pharmacies sued FDA, seeking to establish their contention that FDA was without authority to subject compounds to “new drug” treatment under the FDCA, as amended by the FDAMA and the AMDUCA. In Medical Center Pharmacy et al. v. Gonzales, 451 F.Supp.2d 854 (W.D. Tex 2006), a federal judge sided with the pharmacies. FDA appealed, and in Medical Center Pharmacy v. Mukasey, 536 F.3d 383 (5th Cir. 2008), a three judge panel of the Fifth Circuit Court of Appeals reversed the lower court’s ruling on the critical question and remanded the case to the district court in west Texas. On November 6, 2009, the district issued a new order. In it, the court made clear that “[c]ompounded drugs are not subject to a general exemption from the definitions of “new drug” and “new animal drug” contained in 21 U.S.C. § 321 (p)(1) and (v)(1).” That’s the bad news. But the court also said that new drugs resulting from compounding and new animal drugs resulting from compounding are exempt from new drug approval, adulteration and misbranding provisions of the FDCA as long as they comply with the conditions of § 353a and § 360b(a) respectively.
Accordingly, after November 6, 2009, § 353a provides a safe harbor for compounds if “the drug product is compounded for an identified individual patient based on the unsolicited receipt of a valid prescription order or a notation, approved by the prescribing practitioner, on the prescription order that a compounded product is necessary for the identified patient, if the drug product meets the requirements of this section, and if the compounding–
(1) is by (A) a licensed pharmacist in a State licensed pharmacy or a Federal facility, or (B) a licensed physician, on the prescription order for such individual patient made by a licensed physician or other licensed practitioner authorized by State law to prescribe drugs; or
(2)(A) is by a licensed pharmacist or licensed physician in limited quantities before the receipt of a valid prescription order for such individual patient; and (B) is based on a history of the licensed pharmacist or licensed physician receiving valid prescription orders for the compounding of the drug product, which orders have been generated solely within an established relationship between–
(i) the licensed pharmacist or licensed physician; and
(ii)(I) such individual patient for whom the prescription order will be provided; or
(II) the physician or other licensed practitioner who will write such prescription order
21 USC § 353a.
This provision would appear to exempt from FDA new drug requirements the overwhelming majority of compounders, even though the subparagraph (2)(A)’s term “limited quantities” is subjective.
A similar exception is made for compounded animal drugs, which escape new drug treatment under § 360b(a)(4) and (5). “Accordingly, paragraph (4) establishes that if a new animal drug is approved for one animal use, it can be used for a different unapproved use (i.e., compounded), and paragraph (5) provides that if a new drug is approved for human use, it can be used for a different unapproved animal use (i.e., compounded). In both cases, the drug must be used pursuant to the order of a licensed veterinarian and is subject to the FDA’s discretionary finding that it poses a risk to public health.” Medical Center Pharmacy, 536 F.3d at 408.
A lingering issue is FDA inspections. In their 2004 victory over FDA in the district court, the pharmacies asked for and received a declaratory judgment that supported their contention that as long as pharmacies complied with § 374(a)(2)(a) of the FDCA (that is, they complied with local pharmacy regulations and dispensed compounds in the ordinary course of business), they were exempt from a provision of the FDCA that authorizes the FDA to make unannounced inspections. But in light of the Fifth Circuit’s holding on appeal, the district court in its November 6, 2009 order said this: “In accordance with the [Fifth Circuit] Court of Appeals’ decision and going forward, the FDA may, after giving specific notice to the compounding pharmacy, inspect at reasonable times and in a reasonable manner Plaintiffs’ operations to determine whether the drugs compounded there are eligible for the exemptions provided by § 353a and/or § 360b(a).” The pharmacies filed a Notice of Appeal protesting this portion of the district court’s November 6, 2009 order. On appeal, the Fifth Circuit vacated the district court’s November 6, 2009 order with regard to the FDA’s right to inspect. However, the Fifth Circuit’s decision was not based on the merits, but on a procedural issue. Thus, the district court’s conclusion may be correct on the merits. This inspection issue remains unanswered.
As of today, the law provides that compounds are subject to FDA regulation as new drugs but are exempt from new drug requirements as long as they operate in accordance with § 353a, which generally requires a traditional compound pharmacy retail setting where drugs are made to prescription order and not mass produced from bulk chemicals for extensive distribution. However, the issue of the FDA’s right to inspect the operations of a compounding pharmacy remains an open issue.
We are continuing to monitor this case for further developments.
