FDA Officially Releases Four Compounding Draft Guidance Documents and Its Draft Memorandum of Understanding; Part Two: FDA Provides Details on the Draft Standard MOU

February 20, 2015

By Karla L. Palmer

Following our blogpost describing the four human drug compounding draft guidance documents and draft Memorandum of Understanding (MOU) that FDA released last Friday, FDA formally published the documents in the Federal Register on February 19th.   Interested persons should note the docket numbers in the notices so they can post comments (due 90 days from today for the four draft guidances and 120 days after today’s publication for the draft standard MOU).  FDA also finally withdrew the draft MOU that it issued in January 1999 (to our knowledge no state had signed it).  That 1999 draft, which received over 6,000 public comments, defined “inordinate amounts” as when the number of compounded drugs dispensed or distributed interstate annually is equal to or greater than 20 percent of all drugs dispensed by the facility, and contained other controversial provisions.  Recall that under FDCA Section 503A, states have a choice of either signing an MOU with FDA, or human drug compounders within that state acting pursuant to Section 503A must limit out of state shipments to 5 percent of all prescription orders dispensed or distributed by the pharmacy or physician.  

Concerning the new draft “standard” MOU, FDA consulted with NABP (as statutorily required), and already received 31 public comments on the new MOU after it promulgated draft guidance for Section 503A compounders in December 2013.  FDA reiterated today that it does not intend to enforce the 5 percent limit on interstate distribution of compounded human drug products until after FDA has finalized the MOU and made it available to the states for their consideration and signature.

After considering any comments on the new draft standard MOU, FDA will determine how long it will allow states to “consider whether to sign the [final] MOU before FDA begins to enforce the 5 percent limit in those states that have not signed an MOU.” Nonetheless, the Agency proposes a 180-day period after the final standard MOU is made available for signature.  After that, FDA will enforce the 5 percent limit in States that have not signed the MOU.

The Notice sets forth key provisions of the new draft standard MOU, and compares it to the 1999 version where appropriate.  Some highlights:

Investigation of Complaints — States must investigate complaints related to compounded products distributed out of state, including adverse drug experiences and product quality issues, and take action as necessary to identify public health risks.  States must notify FDA in 72 hours of a “potential public health risk or immediate safety concern,” such as a report of a “serious adverse drug experience” or “serious product quality issue,” and maintain records for three years.  Definitions of these terms, included in the MOU appendix, are taken from relevant sections of FDA’s regulations for manufactured drugs (21 C.F.R.  §§ 310.305 and 314.81).

Unlike the 1999 version, the new MOU is clear that states are only required to investigate complaints for compounds distributed from their state into another state, and are not required to investigate potential FDCA violations.  The new draft MOU also is clear that the types of complaints states should investigate include any adverse drug experience (not just serious adverse drug experiences) and product quality issues that, if left uncorrected, “could lead to potential public health risks or safety concerns.”  FDA states that even “nonserious” adverse drug experiences and product quality issues may be indicative of significant problems at the facility.

Distribution of Inordinate Amounts: “The 30 % Limit” — The new draft MOU requires states to review compounding records during pharmacy inspections to determine whether the physician, pharmacist or pharmacy’s interstate distributions are “inordinate,” and to notify FDA of that determination.  Distributions are “inordinate” if “the number of units of compounded human drug products distributed interstate during any calendar month is equal to or greater than 30 percent of the number of units of compounded and non-compounded drug products distributed or dispensed both intrastate and interstate by such pharmacist, pharmacy, or physician during that calendar month.”  FDA does “not intend to consider” prescriptions dispensed to a patient or patient’s agent where that patient carries the drug across state lines after dispensing at the compounding facility.  Note that the 1999 MOU draft considered a 20 percent total annual interstate limit, and interstate quantities of individual drugs (including different dosage strengths of same active ingredient) could not exceed five percent even if the total distributed interstate was less than the 20 percent.  Unlike the new version, the 1999 draft also excluded from its “inordinate” percentage determination “local” interstate distribution to patients within 50 miles of the compounding pharmacy, and interstate distribution in response to a public health emergency or catastrophic event.  Importantly FDA discussed that a “distribution” now occurs when a compounded drug leaves the facility where it was made, regardless of whether the drug is also deemed to be “dispensed.”

Although comments on the 1999 draft and the 2013 Section 503A draft guidance objected to defining “inordinate” or placing percentage restrictions on interstate distributions, FDA proposed the following reasons for its 30 percent limit definition of “inordinate”:

  • Congress imposed strict restrictions on the distribution of drug products compounded under Section 503A to protect the public health and integrity of the drug approval process.
  • Congress did not intend for compounders to become manufacturers operating a substantial portion of its business interstate. 
  • Congress recognized that Section 503A compounders are primarily subject to state oversight.  States face challenges if substantial amounts of the compounded products are distributed out of state. 
  • The 5 percent limit in Section 503A is a “baseline measure,” leaving FDA (with assistance from NABP) to address whether a limit higher than 5 percent would be appropriate, provided states agree to appropriately investigate compounded products distributed outside of the state. 
  • FDA currently believes the 30 percent limit balances access with the need to protect the public health and the drug approval system.
  • FDA also considered that patients can now obtain compounded human drug products from outsourcing facilities, which may mitigate access concerns.
  • Addressing contiguous states, FDA believes that the 30 percent limit on inordinate amounts is “high enough that special calculations to address interstate distribution between contiguous States or over short distances are not needed.”  FDA added that the draft also excludes from the 30 percent limit those patients that carry the dispensed product across state lines.
  • The draft does not exclude from the calculation of “inordinate amounts” interstate distributions in response to a public health emergency or catastrophic event. FDA believes the 30 percent limit affords “adequate opportunity for interstate distributions.”  FDA notes that outsourcing facilities “may be able to compound drugs in an emergency and drugs on FDA’s drug shortage list, further mitigating access concerns.”

A few final points.  It is plain from the notice that FDA does not expect to negotiate with states different provisions of the MOU.  It believes that a standard MOU will prevent a patchwork enforcement approach.  FDA also rejected comments seeking to exempt non sterile drug products and home infusion pharmacies from interstate limits.  FDA stated Congress did not exempt particular drugs or entities from the 5 percent limit; FDA believes that the 5 percent limit and the MOU limit on inordinate amounts “are important to distinguish pharmacy compounding from conventional manufacturing in the guise of compounding, and to protect consumers and the integrity of the drug approval process.”  FDA’s efforts to regulate compounding have proven controversial over the years, and many FDA proposals have triggered significant criticisms. The draft MOU is unlikely to be an exception to this pattern.