FDA provides more guidances for compounding pharmacies; HHS worries about volume growth

New guidance restricts some compounding to other than “essentially copies” of approved products

FDA is attempting to bring new rigor to pharmacy compounding—the practice of pharmacists creating different formulations of existing drugs or drug bulk substances, ostensibly to meet individual patients’ needs. The new draft guidances (here and here) call for banning the production of compounded drugs that are “essentially copies” of existing pharma and OTC products—which ought to be good news for branded pharma companies. These guidances, which follow three others issued last spring, follow through on the 2013 Drug Quality and Security Act (DQSA), which was passed in the aftermath of a widespread healthcare crisis caused by a now-shuttered compounding pharmacy, New England Compounding Center, which allegedly caused dozens of deaths and hundreds of injuries due to nonsterile compounding.

An "identical or nearly identical" compounded drug will have the same API(s), route of administration, strength, dosage form and excipients. However, drugs that are on FDA's drug shortage list are allowed to be compounded, at least until notice of the end of the shortage is announced. Further, if the compounded drug has a "clinical difference" when administered to a patient, it is also acceptable to produce. While these restrictions appear fairly straightforward, they do leave considerable discretion to prescribers--and FDA evaluators--in how they are enforced.

And while these guidances follow another dozen or so documents FDA has issued on the subject since passage of DQSA, there are signs that the compounding business is still problematic. While over 60 “outsourcing facilities” (those that compound for stock, not to immediately deliver a prescription to a named patient) have voluntarily registered with FDA as “503b” facilities, nearly every one of them that has been inspected by FDA has received a 483 warning letter, according to FDA’s online compilation. Also in late June, the Office of Inspector General (OIG) of HHS issued a “Data Brief,” finding that compounded drug spending under Medicare Part D has skyrocketed, growing by 625% over the 2006-2015 period while overall Part D spending has grown by 167%. And it jumped 56% in 2015 over the previous year alone, reaching $509 million.

There’s nothing illegal, or necessarily medically improper, about growth like that, except that it has been accompanied by a growing number of criminal cases involving activities such as pharmacists giving kickbacks to physicians prescribing compounded products (or even prescribing products for phantom patients—an example of Medicare fraud). Over the past two years, the Dept. of Defense has seen a comparable jump in Tricare prescribing for compounded products, while several compounding pharmacies are in litigation with pharmacy benefit managers over tight restrictions on compounded products for PBM covered lives.

Pharmaceutical compounding has a hallowed history—in an earlier times, pharmacists essentially compounded nearly all products, and patients were dependent on the quality of work of their local pharmacist rather than FDA and the drug industry. Compounding is necessary for some patients, such as for pediatric cases, or for those who cannot swallow a pill. Compounding is legally protected in most states by pharmacy licensing processes. But for years, FDA and the pharmacy profession have been tilting at each other, because FDA has continually tried to step into the practice when compounding becomes a business of manufacturing drugs on a commercial scale; at various times, pharma companies have battled pharmacists who were producing products competing directly against branded drugs. DQSA has been an attempt to find a middle ground—in theory, hospitals and other prescribers would preferentially use 503b facilities, which meet FDA GMP standards, as opposed to facilities that do not register.

The new guidances are now in a 90-day comment period. Over the past two years, FDA has issued at least 16 compounding guidances, seven of which are now in final form.