Health Law Update

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On November 18, 2013, the Senate, by voice vote, approved the Drug Quality and Security Act (DQSA), intended to bolster the Food and Drug Administration's (FDA) oversight of compounding pharmacies in light of last year's unfortunate incidents involving compounded medications and meningitis. The DQSA has received significant bipartisan support since its introduction and approval by the U.S. House of Representatives in September, and President Obama is expected to sign the Act into law within days.

According to the DQSA's sponsor, Rep. Fred Upton (R-Mich.), Chair of the House Energy and Commerce Committee, the DQSA builds on previous legislative proposals by eliminating certain provisions of the Federal Food, Drug, and Cosmetic Act (FFDCA) that created uncertainty surrounding compounding laws, requiring the FDA to engage in two-way communications with state regulators and permitting entities that engage in pharmacy compounding to voluntarily register as "outsourcing facilities," making them subject to FDA current good manufacturing practices (cGMPs), risk-based inspection provisions and other standards. The DQSA also includes provisions addressing drug supply chain security.

Voluntary Outsourcing Facilities

The DQSA provides for a voluntary process for compounding pharmacies to register with the FDA. While registration is voluntary, entities that register with the FDA as outsourcing facilities may gain access to a new business model. For example, pharmacies that do not register as outsourcing facilities may be prohibited from compounding drugs for office use, whereas registered outsourcing facilities, which can include entities other than licensed pharmacies, are not required to obtain prescriptions for identified patients, thus allowing them to compound drugs pursuant to non-patient-specific purchase orders. In addition, drugs compounded by a licensed pharmacist at registered outsourcing facilities would be exempt from FDA adequate directions for use, new drug application and approval and drug supply chain security requirements, so long as the following conditions are met:
<ul>
	<li>Registration. Outsourcing facilities that elect to register with the FDA must pay an annual registration fee of $15,000.</li>
	<li>Compounding Limitations. Registered outsourcing facilities are prohibited from compounding certain drugs, such as drugs that have had their approval withdrawn for safety reasons or drugs included on a newly created list maintained by the FDA of drugs or categories of drugs that are reasonably likely to lead to adverse effects.</li>
	<li>Labeling. Drugs compounded by registered outsourcing facilities must be labeled in a manner that prominently identifies the drug as a compounded drug product.</li>
	<li>Reporting. Registered outsourcing facilities must submit biannual reports identifying the drugs compounded by the facility for the prior six-month period and information concerning each drug. Registered outsourcing facilities also must report adverse events to the FDA.</li>
	<li>Inspection. Registered outsourcing facilities will be subject to inspection by the FDA on a risk-based schedule to determine inspection frequency that will consider factors, such as the facility's compliance and recall history or the inherent risk of the drugs compounded at the facility. Registered outsourcing facilities will be subject to "reinspection" fees should the FDA inspect the facility more than once in a given fiscal year.</li>
	<li>Penalties. If a registered outsourcing facility fails to pay its registration and reinspection fees, all of the drugs compounded by the facility will be considered misbranded until payment of the outstanding fees.</li>
</ul>
Traditional Compounding and Communication With State Boards of Pharmacy

The DQSA does not regulate traditional pharmacy compounding and, thus, allows
state boards of pharmacy to retain primary oversight authority over such compounding activities. In addition, the DQSA provides for enhanced communications between the FDA and state boards of pharmacy by requiring that the FDA, in consultation with the National Association of Boards of Pharmacy, implement a system by which state boards of pharmacy may submit information describing actions taken against compounding pharmacies within the state and reporting compounding pharmacies that may be in violation of federal law.

The DQSA also commissions a Government Accountability Office study to be submitted to Congress within three years of bill passage that includes a review of pharmacy compounding in each state, including the laws and policies governing pharmacy compounding in each state and state enforcement of these provisions, the tools available to permit purchasers of compounded drugs to assess drug safety and an evaluation of the effectiveness of the communication system between the FDA and state boards of pharmacy.

Clarification of the FFDCA

The DQSA also modifies multiple provisions in Section 503A of the FFDCA relating to pharmacy compounding. Specifically, provisions in 503A of the FFDCA prohibiting compounding pharmacies from advertising or promoting the compounding of any particular drug, class of drug or type of drug are struck from the FFDCA under the DQSA. However, the DQSA leaves the exemption from Section 351(a)(2)(B), 352(f)(1) and 355 in place for traditional pharmacy-compounded products.

Issues to Consider With the DQSA
<ul>
	<li>National Compounding Standards. While the DQSA establishes a voluntary registration for outsourcing facilities, will it regulate or change any standards for those facilities that choose not to register with the FDA (i.e., traditional pharmacy compounders)?</li>
	<li>Voluntary Outsourcing Facility Registration. While voluntary registration may provide outsourcing facilities with some benefits, including the ability to compound drugs pursuant to a non-patient-specific purchase order, it will be interesting to see if pharmacies believe the cost of compliance with the DQSA's requirements outweigh these benefits.</li>
	<li>Sterile vs. Nonsterile Compounding. Under the DQSA, an outsourcing facility is defined as a facility that is "engaged in the compounding of sterile drug products." But what about pharmacies that provide compounded nonsterile topical or liquid medications?</li>
	<li>Animal Use. The DQSA's provisions apply only with respect to "human drug" compounding, even though a significant proportion of compounded drugs are intended for animal use. How will the DQSA affect compounding pharmacies that specialize in veterinary medication?</li>
	<li>USP Adoption. Although the DQSA mentions United States Pharmacopeia (USP) standards, it does not expressly adopt these standards or apply them to compounding pharmacies nationwide. What role will USP standards play in the regulation of compounding pharmacies if the bill becomes law?</li>
</ul>

Senate Passes “Drug Quality and Security Act”