GAO Report on Drug Compounding: Lack of Both Clear Authority and Reliable Data Compounds FDA’s Inability to Act

August 4, 2013

By Karla L. Palmer

The General Accountability Office (“GAO”) recently released its Report on Drug Compounding as Congress faces dueling compounding bills in the Senate (S. 959, Pharmaceutical Compounding Quality and Accountability Act, sponsored by Sen. Tom Harkin) and the House of Representatives ( H.R. ___, The Compounding Clarity Act, authored by Rep. Morgan Griffith; H.R. 2186, Verifying Authority and Legality in Drug Compounding Act of 2013, sponsored by Rep. Ed Markey; H.R. ___, Supporting Access to Formulated and Effective (S.A.F.E.) Compounded Drugs Act, sponsored by Rep. Rosa DeLauro.  The House Committee on Oversight and Government Reform requested GAO to conduct the drug compounding investigation because of the 2012 NECC fungal meningitis outbreak and because GAO was asked to update its 2003 testimony on drug compounding.  The detailed Report addresses: (1) the current status of FDA’s authority to regulate compounding, including perceived gaps between federal and state authority; (2) FDA’s use of data and its authority to oversee or otherwise regulate compounding; and (3) state and pharmacy organization actions taken to improve oversight of compounding pharmacies.  The GAO reviewed the current federal statutory and regulatory scheme, reviewed FDA data and databases, conducted interviews of federal officials and national pharmacy organizations, and reviewed compounding in four states: California, Iowa, Connecticut, and Florida (chosen because of their varied populations, geography and pharmacy regulations).  The GAO conducted the audit from February to July 2013.  The Report recognized that drug compounding, performed by thousands of pharmacies, is “an integral part” of the pharmacy profession and is practiced in many environments, including hospitals (77% of which purchase compounded products from an outside source); community and chain drug store pharmacies; and infusion settings.  It noted that compounded drugs make up about 1-3% of the U.S. prescription drug market.  Report at 5.

The GAO reached several conclusions and made both recommendations for Congressional Consideration and Executive Acton, including the following:

  • FDA’s inspection authority and inconsistent court decisions have hampered its ability to inspect and take enforcement action against pharmacies since at least 2002.  According to GAO, the “lack of consensus” concerning when compounding becomes manufacturing where FDA has clear authority (i.e., anticipatory compounding, or whether compounding drugs in large quantities and selling across state lines is manufacturing) has resulted in gaps in oversight between state and federal regulatory entities.  Report at 7-9.  GAO discussed FDA’s proposal to create a new category of “nontraditional compounding” and the objections to the same by some national pharmacy organizations. 

o GAO recommends that Congress clarifies FDA’s authority to regulate drug compounding.  Report at 27 (Matter for Congressional Consideration).

  • Combined with limited oversight, GAO found that FDA “lacks timely and reliable information” to prioritize inspections, and conduct follow up and enforcement actions.  FDA’s FACTS inspection database fails to identify the Agency’s pharmacy inspection activities and the final classification of those inspection results.  Until 2012, FDA did not inspect pharmacies unless it received complaints or adverse event reports.  FDA registration of some pharmacies as manufacturers has also resulted in no additional FDA inspection oversight, and causes confusion concerning the significance of a pharmacy’s FDA registration as manufacturer.  Of the 194 pharmacy inspections since 2002 FDA failed to take enforcement action against at least 31 where significant problems were found (GAO did not consider issuance of warning letters to be enforcement action).  GAO concluded that “FDA lacks ready access to key data to inform its decision making on its oversight priorities and take appropriate action when problems are identified.”  Report at 16.  GAO also addressed FDA’s recent and ongoing inspections of sterile compounding pharmacies, blogged about here, noting that these inspections revealed numerous sterility issues.

o GAO recommends that FDA ensure its databases (including its FACTS database) collect “reliable and timely” information on all inspections including recommendations from districts and actions taken.  FDA also must differentiate in its database “those manufacturers of FDA-approved drugs that FDA inspects for compliance with good manufacturing practices from those entities compounding drugs that are not FDA-approved and that FDA does not routinely inspect.’’  Report at 27 (Recommendations for Executive Action). 

While it made no specific recommendations as a result of the state regulatory schemes it reviewed, GAO detailed for each of the four identified states their vastly different abilities to effectively oversee compounding activities.    In its separate comments concerning the Report, HHS agreed generally that the Report “accurately details the limitations associated with FDA’s authority to oversee drug compounding,” and thus supports GAO’s conclusion that Congress should consider clarifying FDA’s authority to “oversee entities that compound drugs.”  Report at 27.  With three very different, and controversial, compounding bills pending, and after several hearings on these issues, Congress is indeed already “considering” FDA’s authority to regulate compounding pharmacies.  Faced with significant and mounting opposition from pharmacy groups and other stakeholders concerning the reach and provisions of the proposed legislation, whether Congress ultimately passes any of the three remains uncertain.  Stay tuned.