Pharmacy compounding, as the Food and Drug Administration
("FDA") explains, "is an age-old practice in which
pharmacists combine ... ingredients to create unique medications
that meet specific needs of individual patients." The FDA has
recognized that "pharmacy compounding is a vital service that
helps many people."1 Congress expressly recognized
and regulated the practice by adding §503A to the Food, Drug,
and Cosmetic Act. But the fundamental legal questions about
compounding still have no definitive answer.
Is pharmacy compounding even legal? The FDA's position is oddly
ambiguous. The relevant FDA guidance document states that
§503A "is now invalid," and the Courts of Appeals
are split on this point. The FDA warns that certain perceived
abuses are subject to enforcement action, but the guidance document
is pointedly silent regarding the legality of compounding as it is
traditionally practiced. The FDA's implied position, and the
stance it has taken in recent litigation, is that although even
traditional forms of compounding are illegal, the FDA will exercise
its discretion and will refrain from enforcing against most
compounding.
In response, pharmacists have complained to the courts that
"it remains no small burden ... to 'live in
sin'—their livelihood having no greater assurance
than the FDA's good graces."2 Two recent court
rulings have accepted this argument: the Fifth Circuit's 2005
decision in Medical Center Pharmacy, and
Franck's, a September 2011 opinion from the Middle
District of Florida. These two opinions, although approaching the
analysis quite differently, have found common ground. Both hold
that the FDA has authority to curb abuses. But these two courts
also took the view that traditional compounding practices are
legal, and that the livelihoods of compounding pharmacies do not
depend upon the FDA's tolerance of "sin."
Pharmacy Compounding and the First 50 Years of the Food, Drug, and Cosmetic Act
The practice of pharmacy compounding, by all accounts, is both
ancient and ubiquitous. Pharmacies have compounded drugs with
mortars and pestles—the tools that have become their
symbols—for centuries, if not longer. In the 19th
century, the vast majority of prescriptions were filled through
compounding. Pharmacists continued to fill most prescriptions
through compounding until well after the 1938 enactment of the
Food, Drug, and Cosmetic Act (the "Act," or
"FDCA").3
Today, pharmaceutical manufacturers produce, in final form, the
vast majority of medications. However, compounding remains
widespread. The FDA views compounding as vital, particularly for
people "who are allergic to inactive ingredients in
FDA-approved medicines, and others who need medications that are
not available commercially." The FDA likewise recognizes that
"compounded medications are also prescribed for children who
may be unable to swallow pills, need diluted dosages of a drug made
for adults, or are simply unwilling to take bad-tasting
medicine."4 Walgreens, the nation's largest
pharmacy chain, advertises compounding services on its web site,
claiming essentially the same benefits.
The FDCA prohibits the sale of "new drugs" without the
approval of the FDA. Multiple courts have found the literal
definition of "new drugs" to be sufficiently broad to
encompass medicines resulting from pharmacy compounding. While
pharmacies in theory could seek approval for compounded products,
"because obtaining FDA approval for a new drug is a costly
process, requiring FDA approval of all drug products compounded by
pharmacies for the particular needs of an individual patient would,
as a practical matter, eliminate the practice of
compounding."5
The original 1938 Act left unanswered the question of whether the
prohibition of unapproved drugs was intended to ban compounding.
Indeed, the original Act does not mention pharmacy compounding in
any context. According to the Fifth Circuit, "[f]or roughly
fifty years following the FDCA's enactment, the compounding
question lay dormant, without dispute and without
answer."6 Most states regulate compounding as part
of their oversight of pharmacies. Accordingly, the U.S. Supreme
Court observed that "[f]or approximately the first 50 years
after the enactment of the FDCA, the FDA generally left regulation
of compounding to the States."7
The first mention of compounding in the Act arrived with the Drug
Amendments of 1962. As part of an extensive overhaul of the Act,
the Drug Amendments required manufacturers and others to register
their establishments and broadened the ability of the FDA to
conduct site inspections. The Amendments, however, exempted
"pharmacies ... which do not ... compound, or process drugs
for sale other than in the regular course of their business of
dispensing or selling drugs at retail." These provisions
remain in effect, at sections 510(g)(1) and 704(a)(2)(A) of the
Act.
The FDA's Concerns About Compounding, and Recent Enforcement Activity
Beginning in the 1990s, and continuing to the present, the FDA
has become increasingly concerned about the dangers it perceives
from compounding. These concerns fall roughly into two categories.
First, some companies allegedly engage in the large-scale
production of drugs under the guise of compounding. Such companies,
in the FDA's eyes, are acting like manufacturers, but often
without complying with the regulations requiring good manufacturing
practices. This can cast doubt upon the purity and quality of the
drugs, and a 2006 study performed by the FDA found that one third
of the compounded drugs sampled "failed analytical testing
using rigorously defensible testing methodology."8
The FDA considers a company to be an illegal manufacturer, rather
than a traditional compounder, if it produces drugs in large
volumes without having first received prescriptions for the drugs,
or if it produces drugs that are substantially identical to
approved drugs (and hence the compounding does not further the goal
of creating custom-tailored products for patients who cannot use
available approved drugs).
The FDA's second principal concern is that since very few
compounded drugs are within the scope of an approved new drug
application, the FDA has not verified the safety and efficacy of
most compounded medicines. These concerns are enhanced where the
FDA comes to believe that particular drugs are dangerous as
compounded, or are ineffective for their promoted uses. Thus, in
recent years, FDA enforcement has often focused on removing
specific compounded drugs from the market. In 2008, for example,
the FDA launched a major campaign against "bio-identical
hormone replacement therapy" ("BHRT"), alleging that
compounders of BHRT products were making unsubstantiated claims
that BHRT was a superior treatment for menopausal hormone therapy,
Alzheimer's disease, stroke, and cancer. Other enforcement
campaigns in the past five years have targeted products made for
"lipo-dissolve" treatments, topical anesthetic creams,
inhalation drugs, and domperidone.
When discussing its enforcement policies—at least
regarding drugs for human use—the FDA is always careful
to state that it is not targeting "traditional" pharmacy
compounding, meaning small-scale activity in response to physician
prescriptions. (The FDA's policy toward the compounding of
animal drugs is in some respects stricter, as discussed below.)
Nevertheless, the FDA has declared that the entire practice of
compounding is "under FDA scrutiny." The FDA publishes an
article for consumers titled "The Special Risks of Pharmacy
Compounding" and publishes posters warning that compounded
drugs can "present risks to patients" and "can
expose many patients to health risks associated with unsafe or
ineffective drugs."9
The Enactment and Sudden Demise of Federal Legislation Regulating Pharmacy Compounding, and the FDA's Assertion of Unbounded Enforcement Discretion
In 1997, Congress amended the FDCA to add a new §503A,
titled "Pharmacy Compounding." Section 503A exempted
compounded drugs from key portions of the Act: the prohibition
against selling unapproved new (human) drugs, the requirement to
comply with "good manufacturing practices" regulations,
and certain labeling requirements.
Section 503A also reflects many of the FDA's concerns about the
practice of compounding. To qualify for the exemption, the drug
must be provided in response to a physician's prescription, and
the drug must be compounded by a licensed pharmacist or physician
who does not "regularly or in inordinate amounts"
compound copies of commercially available drugs. Section 503A
limits which drug substances can be used for compounding, and the
FDA can prohibit the use of dangerous substances. Lastly, the
physician prescription must be "unsolicited," and the
pharmacy must not advertise or promote the compounding of any
particular drug.
This last set of restrictions proved troublesome. A group of
compounding pharmacies immediately filed suit, alleging that the
advertising restrictions violated pharmacies' First Amendment
rights. The Ninth Circuit agreed and struck down the entirety of
§503A.10 The Supreme Court affirmed that the
advertising restrictions are unconstitutional but explicitly did
not decide whether the remainder of §503A can be severed.
Thompson v. Western States Medical Center, 535 U.S. 357
(2002).
While the Western States decision was pending, the FDA had
begun implementing §503A. The FDA promulgated regulations
prohibiting the use of a long list of drug products and established
a standing Pharmacy Compounding Advisory Committee.11
But after the Western States decision, the FDA stated that
"all of section 503A is now invalid." Although the FDA
never withdrew the regulations it had enacted under §503A, the
Pharmacy Compounding Advisory Committee stopped meeting, and the
FDA did not update the regulation listing prohibited drug
products.
The FDA's position, stated as recently as 2010, is that
"[b]ecause compounded drugs are 'new drugs' under the
FDCA that are unapproved, the statute generally prohibits their
introduction into interstate commerce."12 The FDA
has issued a nonbinding guidance document setting out when it will
"consider exercising its enforcement discretion regarding
pharmacy compounding." Generally, the FDA does not plan to
bring enforcement proceedings against "traditional"
compounding. But notwithstanding §503A, which exempts
compliant pharmacies from certain code provisions, the guidance
warns that the FDA can charge pharmacists with violating those same
code provisions.
The FDA views its authority to enforce as being broader than the
power delegated under §503A and the resulting regulations. For
example, enforcement proceedings are likely against pharmacies that
compound using any of the drug products listed in the
guidance's appendix. This list is similar to the list that had
been promulgated through notice-and-comment rulemaking, but the
guidance lists drugs that are not named in the formal regulation.
Furthermore, drugs that have been at the center of recent FDA
enforcement campaigns, including BHRT and domperidone, do not
appear in either the guidance or the regulation.
Medical Center Pharmacy and the Pharmacies that Would Not "Live in Sin"
Following the Western States decision, a group of
compounding pharmacies brought a suit challenging the FDA's
authority to regulate compounded drugs as "new drugs" or
"new animal drugs." The pharmacy plaintiffs argued that
they did not "live in sin." They asserted that even
though §503A had been struck down, compounding remained legal,
and pharmacies' right to compound drugs did not depend upon the
FDA's favorable exercise of discretion. See Medical Center
Pharmacy v. Mukasey, 536 F.3d 383 (5th Cir. 2008).
The peril of "living in sin" is by no means trivial. The
FDA's enforcement policy does not bind the FDA, and it is
subject to change at any time without warning. Furthermore, selling
unapproved "new drugs" is a crime, punishable by
imprisonment.
The pharmacies' arguments were well received by the Fifth
Circuit, although the resulting victory was less sweeping than the
pharmacies had hoped. The Medical Center Pharmacy court
viewed the enactment of §503A as making the case
"easy." Breaking with the Ninth Circuit, the Fifth
Circuit held that the unconstitutional restrictions on advertising
are severable from the remainder of §503A, which remains in
effect. Thus, although compounded drugs are "new drugs"
under the FDCA, compounding is legal. As long as pharmacies comply
with the requirements set out in §503A (apart from the
restrictions on advertising), the compounded drugs are exempt from
the rules specified in §503A, including the prohibition
against the sale of unapproved new drugs.
Franck's and the Compounding of Animal Drugs
Drugs intended for animals, like human drugs, are also commonly
compounded. Indeed, compounding may be more prevalent for animal
drugs, since "for significant diseases there are no effective
FDA-approved drugs."13
Under the Animal Medicinal Drug Use Clarification Act of
1994,14 veterinarians are allowed to prescribe approved
human and animal drugs "off-label"—to treat
conditions in animals even in the absence of an FDA finding that
the drug is safe and effective for that particular purpose. The FDA
interprets this statute as allowing the compounding of animal
drugs, and accordingly it promulgated regulations permitting the
practice.15 The regulations, however, permit compounding
only from drugs that are in their approved, final form. The
regulations do not permit "compounding from bulk drugs."
("Bulk" compounding does not refer to the amount of the
drug substance used but means using the chemicals from which a
finished product can be manufactured, rather than using final-form
medicines.)
The omission of bulk drugs from the animal compounding regulation
is significant. There does not appear to be any dispute that
compounding from bulk drugs falls squarely within the
"traditional" practice of compounding. Indeed, courts
have found that it is more difficult, more dangerous, and more
expensive to compound from finished products. Finished products
typically are mixtures of active and inactive ingredients, and
compounding from such a mixture requires a pharmacist to reverse
engineer the finished product into its unfinished form, and then
determine how to separate and recombine ingredients into the
prescribed dosage, formulation, and strength. The FDA, in excluding
bulk drugs from the animal drug compounding regulations, did not
find that compounding from bulk drugs was unduly dangerous or in
any respect inferior to compounding from finished products. The
FDA's rationale was that in the 1994 amendments, Congress
permitted only off-label uses of approved drugs, and therefore
Congress did not authorize the use of bulk products.16
By contrast, §503A—which focuses on drugs compounded
for humans—requires the use of bulk drug
substances.
In any event, the FDA takes a firm position against the bulk
compounding of animal drugs. The relevant guidance document flatly
states that "the compounding of a new animal drug ... from
bulk drug substances results in an adulterated new animal
drug...."
The FDA began cracking down on bulk compounding in the late 1980s.
Rather than proceed against the people performing the compounding
(largely veterinarians, as well as pharmacies), the FDA obtained
injunctions against their suppliers.17 In doing so, the
FDA did not prove that compounding was illegal. Instead, the FDA
used a wrinkle in the labeling regulations that effectively made it
impossible for wholesalers to lawfully label bulk
containers.18
In 2010, the FDA brought suit against a Florida pharmacy,
Franck's Lab, seeking to enjoin the bulk compounding of animal
medications. The FDA took "the bright-line position that
any compounding of animal medications from bulk substances
violates [the Act], even when conducted by a state-licensed
pharmacist for an individual animal patient pursuant to a valid
veterinary prescription." The Franck's court
found, through undisputed evidence, that compounding from bulk
substances pursuant to a veterinary prescription qualifies as
"traditional compounding," and that the
Franck's litigation was the FDA's first attempt to
bar a pharmacy from engaging in bulk compounding for
non-food-producing animals. The FDA's position, as paraphrased
by the court, was that "state-licensed veterinarians and
pharmacists have, with the FDA's blessing, been 'living in
sin'...."19
The Franck's court, like the Fifth Circuit in
Medical Center Pharmacy, took a dim view of the notion
that compounding pharmacies across the nation are "living in
sin," and found in favor of the pharmacy. But the holdings of
the two courts are in conflict. Medical Center Pharmacy
held that the compounding of animal drugs is lawful only if
performed within the confines permitted by the Animal Medicinal
Drug Use Clarification Act. But no statute or regulation expressly
authorizes bulk compounding of animal drugs, and as a result, the
Franck's court could not decide in the pharmacy's
favor without a broader holding. Franck's thus held
that Congress had never intended to prohibit traditional
compounding, notwithstanding the literal language of the FDCA. To
find such a prohibition by implication from the broad scope of the
statutory definition of "new animal drugs" would be akin
to hiding an elephant in a mouse hole.
Franck's did hold that compounding created "new
animal drugs," that the FDA could distinguish between
manufacturing and compounding, and that the FDA could regulate the
former. But the FDA's authority is restricted to the power to
curb abuses. By asserting authority to enjoin a pharmacy from
traditional pharmacy compounding in compliance with state law,
Franck's held, "the FDA overreaches."
Conclusion
Despite the recent efforts of courts to regularize the federal law
of compounding, the law remains very much in flux. Medical
Center Pharmacy did not resurrect §503A nationwide.
Rather, the case created a circuit split, and the FDA's
published position is that it will follow only Medical Center
Pharmacy in the Fifth Circuit. The Franck's
decision was issued by a district court, and it remains subject to
appeal.
Franck's, if appealed, creates an important
battlefield, and should be followed closely. The
Franck's holding—if
upheld—supports the conclusion that pharmacy compounding
has always been legal and is not a sin permitted at the sufferance
of federal regulators.
Footnotes
1. FDA Consumer Health Information, The Special Risks of Pharmacy Compounding (May 31, 2007).
2. Medical Center Pharmacy v. Mukasey, 536 F.3d 383, 400 (5th Cir. 2005); accord United States v. Franck's Lab, Inc., Case No. 5:10-cv-147-Oc-32TBS (M.D. Fla., Sept. 12, 2011).
3. Pastner, Bruce M.D., J.D., Pharmacy Compounding of Bioidentical Hormone Replacement Therapy (BHRT): A Proposed New Approach to Justify FDA Regulation of These Prescription Drugs at 9.
4. FDA Consumer Health Information, The Special Risks of Pharmacy Compounding (May 31, 2007).
5. Thompson v. Western States, 535 U.S. 357, 369 (2002).
6. Medical Center Pharmacy, 536 F.3d at 389.
7. Western States, 535 U.S. at 362. This did not mean, however, that the FDA had no role in regulating pharmacies. For example, in 1948, the Supreme Court upheld the conviction of a pharmacist who sold medicine in violation of federal labeling requirements. United States v. Sullivan, 332 U.S. 689 (1948).
8. http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm204237.htm
9. http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm107836.htm, http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm238590.htm
10. Western States Medical Center v. Shalala, 238 F.3d 1090 (9th Cir. 2001).
- 11. 21 C.F.R. §§ 14.100(c)(18), 216.24.
12. This language is taken from a warning letter that is highlighted on the FDA's web site. The FDA took a similar position before the Fifth Circuit while litigating Medical Center Pharmacy.
13. United States v. 9/1 KG. Containers, 854 F.2d 173, 174 (7th Cir. 1988).
- 14. Codified at §512(a)(4), (5) of the Food, Drug, and Cosmetic Act.
15. 21 C.F.R. § 530.13.
16. 61 Fed. Reg. 25108 (May 17, 1996); 61 Fed. Reg. 57740 (Nov. 7, 1996).
17. United States v. Algon Chemical Inc., 879 F.2d 1154 (3rd Cir., 1989); 9/1 KG. Containers, 854 F.2d 173 (7th Cir. 1988).
18. Generally, drugs must be labeled to provide patients with "adequate directions for use." FDCA, §502(f). There is an exception for bulk drugs that are shipped to manufacturers named in an approved application. 21 C.F.R. §201.122. However, compounders do not hold such approvals, and the courts held that compounders therefore do not qualify for the exception.
19. United States v. Franck's Lab, Inc., Case No. 5:10-cv-147-Oc-32TBS (M.D. Fla., Sept. 12, 2011).
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