A recent Health Policy Brief from Health Affairs summarized the compounding industry and the changes required by H.R. 3204, the Drug Quality and Security Act (DQSA), which became law in November 2013. Designed to bring "mostly larger compounding pharmacies squarely under the federal regulatory and enforcement fold," the bill was introduced after a nationwide fungal meningitis outbreak in 2012 traced to the New England Compounding Center (NECC) caused 64 people to die and more than 700 people to become ill.
Traditional compounding pharmacies create individualized medicines for patients with specific needs. In the 1990s, however, many large compounding pharmacies like NECC began manufacturing certain drugs in large quantities for sale to doctors’ offices and hospitals—thus crossing the line from "compounding" to "manufacturing" without adhering to federally regulated manufacturing standards.
FDA has always categorized compounded drugs as “new drugs” under the Federal Food, Drug, and Cosmetic (FD&C) Act, the brief stated. Although this allowed FDA some oversight over compounding pharmacies, the agency did little to reign in companies responsible for illnesses and deaths associated with improperly compounded medications, according to the brief. Then, in 1997, Congress attempted to place compounding in a federal regulatory framework—causing a “wave of court cases that left the legal landscape a patchwork of different standards.”
One part of the law, known as the Compounding Quality Act, gives FDA more unambiguous authority over the compounding drug industry. It distinguishes between traditional compounders who work at the neighborhood pharmacy and companies producing large quantities of compounded drugs without the need for a prescription, the brief explained. The act requires two major changes. First, it sets up a voluntary category known as “outsourcing facilities” (section 503B of FD&C Act) that allows compounders to sell unlimited quantities of drugs on FDA’s drug shortage list, as long as the companies follow a set of new procedures and pay a $15,000 annual fee to FDA. The law also allows FDA to distinguish between traditional compounding pharmacies and companies that produce large quantities of compounded drugs.
The other part of the law sets up a national prescription drug "track and trace" system designed to ensure a uniform nationwide standard. Although essentially a separate piece of legislation, the brief explained, “the DQSA's track-and-trace provisions provided a convenient, related, and quickly moving vehicle for the Compounding Quality Act to be enacted.”
The drug compounding community is awaiting more detailed guidance later this year from FDA on several questions, summarized in the brief, that the law has left unresolved. Within the next 3 years, the Government Accountability Office will issue a report assessing how well the new law is working. The “real tests, however, will be how many large compounders voluntarily register under section 503B and whether state regulatory agencies are able to more successfully share information with other states about poor-quality compounders and improve their inspections” and whether another compounding pharmacy tragedy is prevented, the brief concluded.