503B Outsourcing Facilities Exposed to Civil Liability for Allegedly Compounding “Essential Copies” of Commercially Available Drugs

On Sept. 7, 2017, Allergan filed two lawsuits in the US District Court for the Central District of California against Imprimis Pharmaceuticals and Sincerus Florida, two US FDA-registered 503B outsourcing facilities, and Prescriber’s Choice, a management company that assists physicians, claiming they are illegally selling unapproved new drugs under the guise of lawful compounding. Additionally, Allergan claims the three companies are engaging in false and misleading advertising and promotion of unapproved new drugs. In a prepared statement, Allergan said it believes the three defendants are putting patients and physicians at risk and it was taking this step because they, along with companies like them, have a duty to put the safety of their patients first. Drug manufactures are required, under federal and state law via the New Drug Application mechanism, to demonstrate that their drugs are safe and effective prior to marketing them.

Allergan’s complaint alleges that defendants manufacture and market many products, including dermatological products containing dapsone, used to treat acne, that directly compete with Allergan’s FDA-approved Aczone. The defendants claim these products avoid the need for pre-market approval based on proof of safety and effectiveness by relying on Section 503B of the Federal Food, Drug, and Cosmetic Act (FDCA). Section 503B provides an exemption from the drug-approval requirements for “outsourcing facilities” registered with FDA that comply with all of the provision’s conditions. Section 503B permits preparation of unapproved new drugs under certain limited circumstances driven by specific public health needs that cannot be met by commercially available, approved drugs. The exemption from the drug-approval requirement does not apply if, among other things, the drug is “essentially a copy of one or more approved drugs.” A drug qualifies as “essentially a copy” of an approved drug if it is “identical or nearly identical to an approved drug.” Such drugs may be produced only under Section 503B if the approved drug is on FDA’s shortage list.

Allergan also alleges that in addition to compounding “essential copies,” the defendants violated 503B’s limits on the circumstances under which bulk drug substances may be used in compounding. An outsourcing facility may use a bulk drug substance in compounding only if it appears on a list to be developed by FDA “for which there is a clinical need” (also known as the “503B Bulks List”) or, alternatively, “the drug compounded from such bulk drug substance” appears on the FDA’s drug shortage list at the time of compounding, distribution, and dispensing. The FDA has solicited nominations from the public for the 503B Bulks List, but has not yet initiated the notice-and-comment process mandated by the statute for establishing the formal list. The Compounding Guidance states that unless the bulk substance is on the 503B Category 1 list (substances nominated for the Bulks List that are currently under evaluation), an outsourcing facility cannot compound a drug with that bulk substance unless the drug is on the FDA’s shortage list. Per Allergan, the defendants are engaged in the unlawful manufacture and sale of drugs because many of the drugs they sell neither contain ingredients on FDA’s 503B Bulks List nor appear on FDA’s shortage list.

The advent of Allergan’s claims against these defendants adds an additional layer of exposure to the already numerous enforcement actions being undertaken by the FDA and various State Boards of Pharmacy against 503B facilities. One thing is clear from this case and the ongoing enforcement actions, it is essential for 503B facilities to evaluate their products to ensure compliance with Section 503B rigorous requirements. Frier Levitt conducts 503B facility operational compliance reviews and structures compliance programs for 503B facilities, including policies and procedures related to compounding “essential copies.” Contact Frier Levitt today to speak to an attorney.

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