FDA is Seeking Information on Outsourcing Facility Industry “Challenges”

July 2, 2020By Karla L. Palmer

Notwithstanding FDA’s earlier efforts touting the benefits of outsourcing facility registration, here,  there are less than 75 registered facilities.  Almost the same number of outsourcing facilities have opened – and shut – their doors since the passage of the 2013 Drug Quality and Security Act (Title I) (DQSA), which created the outsourcing facility registration category and set forth statutory parameters for their operation.  In addition to those statutory parameters within the DQSA, FDA has published multiple guidance documents dictating additional confines in which outsourcing facilities should function.  Why are not more drug manufacturers or pharmacy compounders jumping at the chance to enter into this novel, unique drug space?  FDA recently published in the Federal Register a notice seeking comments on certain information collection activities in order to better understand issues facing  outsourcing facilities.  See “Activities; Proposed Collection; Comment Request; Obtaining Information To Understand Challenges and Opportunities Encountered by Compounding Outsourcing Facilities (85 Fed. Reg. 36857 (June 18, 2020) (Docket No. FDA–2019–N–3077).  FDA recognizes that, “Five years since its creation, this domestic industry is still relatively small and is experiencing growth and market challenges.”  The Agency further notes that there continues to be drug quality issues concerning the products manufactured at outsourcing facilities.  FDA is soliciting comments on proposed information collection associated with FDA “research” to obtain information from pharmacists and other management at outsourcing facilities, and related compounding businesses, to “support a comprehensive analysis of the outsourcing facility sector that will inform ongoing FDA work in this area.”  More specifically:

FDA intends to engage in several initiatives to address challenges and support compliance and  advancement.  One initiative includes conducting in depth research to understand better the challenges and opportunities encountered by the outsourcing facility sector in a number of different areas. These include: Operational barriers and opportunities related to the outsourcing facility market and business viability; knowledge and operational barriers and opportunities related to compliance with Federal policies and good quality drug production; and barriers and opportunities related to outsourcing facility interactions with FDA.

85 Fed. Reg. 36858.  FDA intends to pose the following types of questions during its research activity, and believes 300 respondents will participate, with total burden of 600 hours.  The types of issues that FDA intends to consider in its research include the following:

  1. What financial and operational considerations inform outsourcing facility operational and business model decisions?
  2. What factors impact the development of a sustainable outsourcing facility business?
  3. What financial and operational considerations inform outsourcing facility product decisions?
  4. Do outsourcing facilities understand the Federal legislative and regulatory policies that apply to them? What, if any, knowledge gaps need to be addressed?
  5. What challenges do outsourcing facilities face when implementing Federal current good manufacturing practice (CGMP) requirements?
  6. How do outsourcing facilities implement quality practices at their facilities?
  7. How is CGMP and quality expertise developed by outsourcing facilities? How do they obtain this knowledge, and what training do they need?
  8. What are the economic consequences of CGMP noncompliance/product failures for outsourcing facilities?
  9. What are outsourcing facility management and staff views on current interactions with FDA? How do they want the interactions to change?
  10. What are outsourcing facilities’ understanding of how to engage with FDA during and following an inspection?

The comment period will be open for 60 days (until August 17, 2020).  This blogger believes other considerations that FDA’s researchers may want to ponder include exactly what outsourcing facilities are permitted to compound, and whether limitations of exactly what an outsourcing facility can used in compounding affects market entry decision making.  In addition, researchers may want to consider the effect on market entry of the “Bulks List 1 (i.e., permissible substances) significant “limitation” on what outsourcing facilities may compound.  Simply put, Bulks List I is woefully “short” – and getting shorter —  when compared to the substances that can be used in compounding by Section 503A pharmacies (even given statutory limitations on compounding “essentially copies” of commercially available drug products).  FDA’s removal of substances from Bulks List 1, after significant investment by outsourcing facilities (i.e., stability and other studies) to ensure the safe, appropriate use of such substances, likely stifles not only innovation in the space, but also the facility’s ability to engage in the expenditure of resources to compound the drug product in the first instance.  This likely affects the ability of outsourcing facilities to engage in profitable compounding opportunities, especially when one considers the effect of FDA’s drug approval status for certain bulk substances on the potential removal of those FDA approved “substances” from FDA’s Bulks List 1 (i.e., vasopressin and others).  Among other significant “market” issues, researchers also may want to consider the effect of the vague “Prohibition on Wholesaling” statutory provision on the ability of outsourcing facilities to sell for resale their safer, cGMP-quality formulations to compounding pharmacies and doctors’ offices.  In addition, FDA should also consider the effect of myriad state licensing requirements on outsourcing facilities’ market entry.  States and FDA have not coordinated registration, licensing or other regulatory requirements.  As two significant examples, some states require pharmacy licensure notwithstanding the DQSA’s provision stating that pharmacy licensure is not required (but operations must be supervised by a licensed pharmacist).  Other states do not permit co-location of an outsourcing facility and a traditional FDA-registered drug manufacturer, notwithstanding FDA’s Facility Guidance that permits such co-location.  If outsourcing facilities want a stake in the discussion, please submit comments to docket number FDA-2019-N-3077, linked here.