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House Version of Compounding Legislation Emerges, Contrasting Sharply With Senate Approach

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By Alexander Gaffney, RF News Editor

Several prominent members of the House of Representatives’ Energy and Commerce (E&C) Committee have released the text of new legislation intended to better regulate the pharmaceutical compounding industry in the wake of a deadly outbreak of fungal meningitis in 2012.

Background: Compounding

In the waning months of 2012, a massive outbreak of fungal meningitis was linked to supposedly sterile versions of methylprednisone acetate manufactured by the New England Compounding Pharmacy, a pharmaceutical compounder based in Massachusetts. An inspection of that facility by FDA would unveil horrific violations, including "white, filamentous substances," green residue in manufacturing hoods, and fungal growth in vials stored at the facility.

In the wake of the outbreak, legislators in both the House and Senate hauled several FDA officials before committees and subjected them to testy hearings, demanding to know why FDA didn't act to shut NECC and facilities like it down sooner.

FDA Commissioner Margaret Hamburg's response: The agency simply doesn't have clear authority to inspect those firms or shut them down thanks to conflicting judicial precedents, a lack of resources and a paucity of legislative authority. While some legislators seemed swayed by this argument, others—mostly Republican members of the House Energy and Commerce Committee—said FDA had all the authority it needed to go after the compounders, even if it would have been more difficult than regulators would have liked.

Background: Legislation

Both the Senate and House of Representatives have been working independently of one another to push forward measures on both compounding and track and trace. On the Senate side, the two measures have been combined into a single bill, the Pharmaceutical Quality, Security and Accountability Act (PQSA Act), while on the House side the measures have been proceeding separately.

The HELP Committee had previously passed separate iterations of the bill, the Pharmacy Compounding Quality and Accountability Act and the Drug Supply Chain Security Act, on 22 May 2013 with unanimous consent, saying the bills would help give FDA new regulatory authority which it could use to better inspect compounding facilities and their products and keep track of the pharmaceutical supply chain.

But the biggest issue of all is unlikely to be the Senate, where the combined measures seem likely to pass thanks to staunch supporters on both sides of the aisle. Rather, the question has been what, if anything, can pass the House of Representatives, and whether such a measure would find support in the Senate or from President Barack Obama.

Now the House is advancing such a compounding measure, providing a glimpse into what will likely be a starting point for future negotiations.

House Legislation: The Compounding Clarity Act

The legislation is the fruit of a joint effort by several prominent members of the E&C Subcommittee on Health: Reps. Morgan Griffith (R-VA), Gene Green (D-TX), Diana DeGette (D-CO).

The legislation essentially preserves the current paradigm for compounders: So long as there is an identified patient and a valid prescription received by the compounder, the company can compound a medicine. In addition, "anticipatory compounding" is allowed in "limited quantities" prior to the anticipated receipt of a valid prescription based on historical demand conditions.

Compounding pharmacies would also be required to be licensed by state boards of pharmacy, as they are now. Further, compounders will be allowed to distribute compounded products for "office use" purposes provided that they are not resold and are generally not sterile products (no more than 5% of all distributed products under office use exemptions).

But key changes will also be coming into effect as well should the legislation pass. Chief among them would be new quality standards requiring a drug to be compounded, stored and labeled in compliance with US Pharmacopoeia good manufacturing practice requirements for compounding and sterile preparations. The legislation also calls for any bulk drug substances to be compounded in compliance with existing monographs or other applicable standards maintained by the USP or National Formulary.

Other parts of the legislation restrict the ability to compound substances if they have been withdrawn or removed from the market for reasons of safety or efficacy and prevent companies from compounding "any drug product that is essentially a copy of a marketed and approved drug product." The latter could be a big deal for companies like KV Pharmaceuticals or Roche, whose products have seen competition from compounders seeking to undercut their products' high prices. In the case of KV Pharmaceuticals, this competition has led to bankruptcy.

The legislation, however, only loosely defines what a "copy of a marketed and approved drug product" is, using the term "essentially" to modify the phrase (i.e. you can't compound what is "essentially" an approved product). That leaves open wide space for legal action in the future by branded manufacturers against pharmaceutical compounders.

In addition—and like the Senate legislation—user fees will be levied on the compounding industry to help fund new inspectional capabilities for FDA. Fees will be $15,000 per facility per year and will be tied to yearly inflation trends. Small businesses will be subject to a reduced fee.

Other interesting points:

  • Wholesalers could not sell compounded products; only the compounding entity can sell its products.
  • State boards of pharmacy—not FDA—will still be the primary vehicles for regulating pharmaceutical compounding, unless a product is shipped across state lines (an "outsourcing" facility)
  • A nationwide "system for receiving and reviewing submissions from state boards of pharmacy" will be set up, in particular to track actions taken against pharmacies or to express concerns about a particular pharmacy'
  • FDA would be given the explicit authority to be able to inspect a compounding pharmacy's records, but such an inspection would need to be conducted in coordination with a state board of pharmacy. This requirement is waived if FDA has "evidence that the pharmacy may be in violation" of a requirement.
  • FDA will be tasked with setting up an advisory committee on pharmaceutical compounding
  • The legislation includes several caveats meant to exempt drugs in a shortage situation from various statutory requirements
  • New uniform labeling and container requirements will apply to all compounded drugs
  • Compounding facilities will need to register with FDA between 1 October and 31 December of each year, or at the first instance of compounding. This registration will also need to include all products compounded at the facility.
  • Facilities will be required to report adverse events to FDA per 21 CFR 600.80

Industry Reaction

While the Senate's PQSA legislation (S. 959) has received a sharp rebuke from the compounding industry, the new House version won warm praise from one of the industry's largest groups, the National Community Pharmacists Association.

"The House legislation appropriately addresses the issues that led to the NECC tragedy and prevents another tragedy from occurring while also not interfering with the physician-patient-pharmacist relationship and maintaining critical patient access to compounded medications," NCPA President B. Douglas Hoey wrote in a statement.

Now legislators will be tasked with negotiating out differences in their legislative approaches. The PQSA is significantly more rigorous toward the compounding industry than the Compounding Clarity Act, and also includes track and trace legislative measures. The significant differences and approaches between the two pieces of legislation mean it could be months before any legislation stands a chance of reaching President Barack Obama's desk.


The Compounding Clarity Act

Legislators' Statements




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