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503A Compounding Alert: FDA Issues a Newly Revised Draft MOU

Earlier this year, the U.S. Food and Drug Administration (FDA) released its 2018 Compounding Policy Priorities Plan, aimed at providing an overview of the key priorities the FDA sought to pursue in its continued implementation of the federal law surrounding compounding. One of the FDA’s action items in the Compounding Priorities Plan was to revise the Memorandum of Understanding (MOU) policy that was initially drafted by the FDA in 1999 and then revised again in 2015. A third, newly revised version is currently available for public comment.

Section 503A of the Federal Food, Drug, and Cosmetic Act (FD&C Act) directs the FDA to develop an MOU for use by the states with the primary purpose of addressing the interstate (out of the state) distributions of inordinate amounts of compounded drug products by traditional compounders, which may be pharmacies or physicians (503A Compounders). If a drug product is compounded in a state that has not entered into the MOU, then the 503A Compounder may not distribute compounded drug products interstate in excess of five percent of the 503A Compounder’s total prescription orders dispensed or distributed by the 503A Compounder. The MOU is applicable to 503A traditional compounding pharmacies or physician compounders, but does not apply to 503B Outsourcing Facilities.

Under the 2015 MOU, states were expected to take action against 503A Compounders that distributed an inordinate amount of its compounded drugs interstate. The 2015 drafted MOU considered an inordinate amount to be an amount of compounded drug products distributed interstate by a 503A Compounder in a given month that is equal or greater to 30 percent of all drug products dispensed or distributed by the 503A Compounder.

The newly revised draft MOU changes the 30 percent threshold and hard-stop in favor of a more risk-based approach. Specifically, the new draft MOU requires states to agree to identify 503A Compounders that distribute more than 50 percent of their total prescription orders for compounded drug products interstate and once identified, then, report certain information to the FDA about those 503A compounders. The information reported to the FDA by the state is to include:

  1. The total number of prescription orders for sterile compounded drugs distributed outside the state
  2. The number of states in which the 503A Compounder is licensed or the number of states into which the 503A Compounder distributes compounded drug products
  3. Whether the state inspected for and found during its most recent inspection that the 503A Compounder distributed compounded drug products without valid prescription orders for individually identified patients

The FDA is hoping this information will assist both the FDA and the states in developing risk-based oversight priorities, to presumably inspect those 503A Compounders taking part in the “riskiest activity.”

Additionally, the MOU addresses appropriate investigation procedures by the state into complaints related to compounded drug products distributed outside the state. The newly revised draft MOU requires that states must notify the FDA as soon as possible, but no later than three business days after receiving any complaint related to a drug product compounded by a 503A Compounder and distributed outside the state involving a serious adverse drug experience or serious product quality issue. After notification, the state must share with the FDA the results of the investigation it conducted regarding the compounded drug product. Complaints that must be investigated by the state include reports received by the state concerning adverse drug experiences or product quality issues associated with compounded drug products distributed outside the state.

In a statement released with the newly revised draft MOU, the FDA indicates, “the revised draft MOU addresses patient access concerns previously raised by stakeholders, while retaining critical safety provisions.” The FDA notes that in response to the draft MOU issued in 2015, “we [the FDA] received public comment expressing support for the MOU, as well as concerns about certain aspects of the framework, particularly its implications for access to compounded drugs. Based on the feedback, we [the FDA] revised the draft MOU in consultation with the National Association of Boards of Pharmacy (NABP). Therefore, the FDA is re-issuing the MOU as a revised draft to provide another opportunity for public comment, particularly on the new revisions made by the agency [FDA].”

Currently, the FDA has exercised it enforcement discretion in not enforcing the 5 percent provision for 503A Compounders that are located in states that have not signed the MOU. After they finalize the MOU, the FDA intends to offer it to the states for signature for a proposed 180-day period. During that time, the FDA does not intend to enforce the 5 percent out of state distribution limitation set forth in the law for 503A Compounders located in states that do not sign the MOU. Presumably, however, after this time period expires the FDA will enforce the 5 percent provision for 503A Compounders that are located in states that have not signed the MOU.

The public comment period for the newly revised draft MOU is open until December 10, 2018. Stakeholders potentially affected by the proposed rule should seriously consider submitting comments and prepare for enforcement of the rules applicable to their particular situation (i.e. how much they ship out of state, and whether their state enters into the MOU).

Frier Levitt assists clients in drafting comments to the proposed rule and formulating compliance strategies. If you are interested in drafting comments or would like more information on how newly revised draft MOU will impact your business, contact Frier Levitt today to speak to an attorney.