Regulatory Focus™ > News Articles > Hamburg: User Fees Might be Solution for Funding Increasing Regulation of Compounding Industry

Hamburg: User Fees Might be Solution for Funding Increasing Regulation of Compounding Industry

Posted 25 March 2013 | By Alexander Gaffney, RAC

Since the 1990s, the US Food and Drug Administration (FDA) has leveraged industry-paid user fees for an increasing number of product areas, starting with prescription drugs and branching off into medical devices, veterinary drugs, biological products and generic pharmaceuticals. Now, a fourth type of user fee may be on the horizon; one for compounded pharmaceutical products.

Call for New Authority

The call for the authority to levy user fees on compounded pharmaceutical products comes from the US' top healthcare regulatory official, FDA Commissioner Margaret Hamburg. Writing in the FDA Voice blog on 22 March 2013, Hamburg said a number of recent problems had made clear the need for increased regulatory authority to FDA to inspect and regulate compounding pharmacies.

Unlike traditional manufacturing operations, compounding facilities operate largely in a regulatory gray area; one in which products made specifically for an individual patient are exempt from seeking out regulatory approval. The problem, as illustrated by a cavalcade of recent events, is that many compounding pharmacies are instead manufacturing products at scale and without waiting for individual prescriptions. In addition, FDA and state regulators' inspections have noted quality problems at dozens of compounding facilities, including one particularly bad outbreak of fungal meningitis emanating from one Massachusetts facility in which black mold was seen visibly floating in un-shipped vials of product.

That incident in particular led Hamburg to be hauled before House and Senate legislators, who demanded she answer for her agency's actions-or lack thereof-during the compounding crisis.

A Proposed Framework

In the lead-up to that hearing, Hamburg put out a proposed framework by which FDA could more appropriately regulate the sector.

"FDA believes that there is a legitimate role for traditional compounding to provide needed drugs to patients that, for example, need a drug that is allergen free or have a medical need that cannot be met with an approved FDA product," explained Hamburg. "However, we have grown increasingly concerned about certain compounding practices, and we have seen an increasing number of incidents related to compounded drugs."

Hamburg presented what she called a "framework" for expanding FDA's regulatory authority, which calls for the segregation of compounding activities into one of two definitions: traditional compounding and non-traditional compounding.

Traditional compounding, Hamburg explained, "Would include the combining, mixing or altering of ingredients to create a customized medication for an individual patient with an individualized medical need for the compounded products, in response to a valid patient-specific prescription or order from a licensed practitioner documenting such medical need." Traditional compounding would remain under the regulatory oversight of state pharmacy boards, Hamburg said.

CGMPs for Compounded Products and a Change of Precedent

Non-traditional compounding would still be for a patient's medical need, but would be regulated by FDA based on the presence of one or more mitigating factors, including the compounding of sterile products, the amount of the product being made, whether the compounding is done before or after the receipt of a valid prescription, and the supply chain of the product.

Hamburg said it is her recommendation that non-traditional compounding should be required to meet current good manufacturing practices (CGMP) standards, and that FDA be allowed to ban the production of certain types of compounds that are not safe "under any circumstances." Those products would include copies of FDA-approved drugs-a major turnaround for FDA, which has maintained that compounders could create copies of KV Pharmaceuticals' Makena (hydroxyprogesterone caproate injection) so long as it was on a small scale and met quality standards. Exceptions would be made for drugs experiencing shortage situations or on a case-by-case basis as FDA finds appropriate.

"FDA would like to explore with Congress other authorities that would be important to support this new regulatory paradigm," added Hamburg, who added the agency would stand to benefit from "clear, full authority to collect and test samples of compounded drugs" and production records from compounding facilities. Those facilities engaged in non-traditional compounding should also be required to register with FDA, she said. Other requirements, such as special labeling and adverse event reporting requirements, would be welcome as well, she added.

User Fees for Compounded Products?

But some industry watchers said that even if FDA received this new authority, there's another problem for FDA: It simply doesn't have the resources to start overseeing and regularly inspecting thousands of new compounding facilities.

Perhaps with that criticism in mind, Hamburg said in her blog posting that FDA "[looks] forward to working with Congress to explore funding mechanisms, which could include registration or other fees, as Congress has authorized and FDA has successfully implemented in other settings."

Such funding might be able to bridge the gap between agency goals and resource limitations. Left unclear, however, is whether the pharmaceutical compounding industry would be on board with the proposal. Past user fee proposals, such as the Prescription Drug User Fee Act, the Medical Device User Fee Act and the Generic Drug User Fee Act have all been passed with the explicit support of their respective industries. In those cases, the respective industries saw an explicit benefit in the accelerated review times that user fees could afford to them, which would in theory pay for the costs of the fees in earlier market access.

That cost calculus may well be different for the compounding pharmacy industry, whose products do not require FDA approval before distribution so long as the products adhere to state and federal regulations regarding the compounding of products. The focus, then, could come to be on compounding facilities and their ability to compound higher-risk sterile drugs.

New Legislation in the Works

Hamburg said FDA is in the process of working with legislators to craft new legislation that would strengthen regulation of the industry.

"The Senate committee with jurisdiction over this issue has been working hard on a bipartisan basis to craft such a framework, and we are hopeful that their efforts will yield strong legislation for patients across the nation," Hamburg wrote.

FDA believes the proposed framework, in addition to the elements discussed easier, must include adverse event reporting, require facilities to register with FDA, and the authority for FDA to inspect a pharmacy's records.

What remains to be seen, however, is whether this framework has a chance at passing Congress. Hamburg's appeals for more authority during her November 2012 testimony before Congress were rebuffed my many legislators, even as others conceded that gaps in regulations and legislation had left the industry operating "without effective oversight and scrutiny," as Sen. Richard Blumenthal (D-CT) put in in a subsequent letter.

Ultimately, legislators may well find themselves pressed to address compounding problems in the compounding industry. The only question, then, is whether their response will look like the framework proposed by FDA, or something entirely different. 

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