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Senate Moves Closer to Passage of Drug Quality and Security Act (H.R. 3204)

The Drug Quality and Security Act (H.R. 3204), while still only a Bill, is one step closer to passage by the Senate. 

The Drug Quality and Security Act (the “Act”) grants the FDA complex new regulatory oversight of certain compounding pharmacies or other facilities. The Act provides the FDA with oversight authority only over pharmacies (or facilities) that do any sterile compounding. The Food, Drug and Cosmetics Act of 1938 (“FDCA”) and case law held that a compound is a “New Drug” for which a “New Drug Application” must be filed, unless exceptions established by the FDA apply. The cost of a New Drug Application is about a billion dollars. Under the Act, the “labeling” and “new drug” registration requirements of the FDCA shall not apply to a drug compounded by a licensed pharmacist in an “outsourcing facility” if certain requirements and conditions are met. 

Among the requirements providing an exception to the “New Drug Application” are that the outsourcing facility:

  • is registered with FDA as an “outsourcing facility” and pays the required annual fees
  • uses only compliant “bulk drug substances”
  • does not use drugs on a list of drugs that have been removed as having been found to be unsafe or not effective
  • does not compound drugs which are “essentially copies” of one or more “marketed and approved drugs”
  • does not allow the compounded drugs to be sold or transferred by an entity other than the outsourcing facility
  • includes on each compounded drug a label that states it is a compounded drug

The Act defines “outsourcing facilities” as a facility that is engaged in the compounding of a sterile drug and “elects” to be registered as an outsourcing facility, but which may or may not be licensed as a pharmacy. Thus, in order to be subject registration requirements with the FDA, a facility must be compounding sterile drugs. However, if the facility compounds any sterile drugs, all drugs compounded by the facility (sterile or non-sterile) must be compounded in compliance with the procedure and protocols required under the Act. Because the Act defines outsourcing facilities as those entities that “elect” to register as an outsourcing facility, it is unclear whether a compounding pharmacy doing sterile medications is required to be registered as an outsourcing facility.

The Act gives the FDA authority to inspect such facilities for compliance with the new law. The Act would also require outsourcing facilities to semiannually report (electronically) to the Secretary of the FDA the drugs compounded by the facility during each prior 6-month period, and to report each active ingredient and the source of such active ingredients used in compounding. This is an extremely onerous requirement and would entail significant data reporting. 

In addition to registration and inspection, the Act would sets forth other requirements and procedures for outsourcing facilities. These include new criteria for the use of bulk drug substances in compounding, and a much more restrictive definition of “essentially a copy of a marketed and approved drug.” Under the new definition, a compounded is “essentially a copy” of a marketed and approved drug if it contains a bulk drug substance that is also an ingredient in a marketed and approved drug, regardless of any other similarities or dissimilarities between the approved drug and the compound. In order to compound any medications using bulk ingredients that are also components of any FDA-approved drug (without violating the Act), the prescribing physician must make a determination that the compounded drug produces for the identified individual patient a clinical difference between the compounded drug and the comparable marketed and approved drug. Various prescribing procedures and standard operating procedures should be designed to ensure compliance with this section of the Act.

The Act may also impact pharmacies that do no sterile compounding. The FDA views non-sterile compounding done pursuant to a prescription as “traditional compounding”, so long as other characteristics are met.  The Act would reinstate Section 503A of the Food and Drug Modernization Act of 1997 (“FDAMA”).  The FDA had viewed FDAMA as having been struck down by Western States v. Thompson in 2002. The Act reinstates all provisions of Section 503A (21 U.S.C. § 353a) relating to pharmacy compounding (with the exception of any unconstitutional limitations on free speech). Thus, FDAMA will become binding on all traditional, non-sterile compounders. This would include the express requirement for a triad relationship between prescriber-patient-pharmacy, as well as potential limitations on mailing large quantities of compounded medications out-of-state. 

The full impact of the Drug Quality and Security Act, for both sterile and non-sterile compounders, will remain to be seen, as it will be largely dependent on “implementation regulations” to be drafted and implemented by the FDA. (While Congress enacts law, federal agencies have the power to promulgate implementation rules explaining the law and how it will be enforced). 

Separate and apart from the sections of the bill relating to compounding, the Drug Quality and Security Act also includes new track-and-trace legislation that is intended to make uniform the patchwork of State pharmacy pedigree laws, and require a uniform system of prescription tracking codes. There have also been several proposed amendments to the bill, raised in the Senate, one which would increase transparency in the use of antimicrobial drugs in food producing animals, and other which would improve the clarity and understandability of labels for all FDA-approved prescription drugs. 

The Drug Quality and Security Act has received bipartisan support, and based on the recent actions, has bicameral traction as well. The measure passed the House in late-September 2013 and was placed on the Senate legislative calendar in early-November. 

It is important for all compounders, sterile or non-sterile, to be knowledgeable of the bill’s provisions and to be prepared to comply with the new law’s requirements. Frier Levitt attorneys have spent hours reviewing the bill and related legislative documents, and have unique insight into the FDA to foresee likely forms of FDA regulations. Contact Frier Levitt for assistance in preparing your pharmacy for the passage of this bill and complying with the laws going forward.