In direct response to the 2012 deadly fungal meningitis outbreak that was linked to unsanitary conditions at a compounding pharmacy, Congress recently passed the Drug Quality and Security Act (DQSA), which, among other things, amended Section 503A of the Federal Food, Drug, and Cosmetic Act (FD&C Act) and added Section 503B to the FD&C Act. Together, Sections 503A and 503B empower the U.S. Food and Drug Administration (FDA) to oversee and regulate human drug compounding. While Section 503A governs traditional pharmacy compounding, Section 503B governs compounding facilities that register as “outsourcing facilities” with the Agency.

Registering as an outsourcing facility is entirely voluntary. But unlike traditional compounding pharmacies, which pursuant to Section 503A compound drugs for particular patients in fulfillment of individual prescriptions, outsourcing facilities will not be required to obtain prescriptions for identified patients and thus will be permitted to compound large volumes of sterile drugs and sell them across state lines.

After initially registering with the FDA, an outsourcing facility must register annually between October 1 and December 31 and must indicate whether, during the next calendar year, it will compound a drug that appears on FDA’s drug shortage list and whether it compounds from bulk substances. The DQSA requires FDA to list all registered outsourcing facilities, including their locations, on the Agency’s website.

FDA’s oversight of outsourcing facilities under the DQSA resembles its oversight of drug manufacturers; among other things, outsourcing facilities must comply with current good manufacturing practices (cGMPs), certain labeling requirements, adverse event reporting obligations, and the prohibition on false and misleading advertising. In addition, the DQSA gives FDA the authority to conduct risk-based inspections of outsourcing facilities, the frequency of which will be based on factors such as facility compliance, recall history, and/or the degree of inherent risk associated with the drugs compounded at the facility. An outsourcing facility that undergoes more than one FDA inspection in a given year will be subject to a reinspection fee.

President Obama signed the DQSA into law on November 27, 2013. Less than a week later, FDA issued three draft guidance documents related to the Act. The draft guidances are summarized below.

Registering as an Outsourcing Facility
Guidance for Industry — Registration for Human Drug Compounding Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act describes the process for registering as an outsourcing facility under Section 503B. Registration is voluntary, and facilities at different geographic locations must register individually. According to the draft guidance, facilities that elect to register as outsourcing facilities should compound sterile drug products (i.e., facilities that only compound nonsterile drugs should not register as outsourcing facilities).

When registering as an outsourcing facility, the registrant must provide the following information:

• Facility name;
• Place of business;
• Unique facility identifier;
• Point of contact email address;
• Whether the facility intends to compound drugs on FDA’s drug shortage list; and
• Whether the facility compounds from bulk drug substances and if so whether it uses the bulk substances to compound sterile drugs.

Facilities should submit this information using the existing Structured Product Labeling (SPL) format, but for an interim period registrants may instead email the information to edrls@fda.hhs.gov. The guidance states that facilities electing to register by email should convert to the SPL format no later than September 30, 2014. Facilities may also apply for a waiver of the requirement to register electronically, though FDA anticipates granting these waivers infrequently, if ever.

Outsourcing facilities may register without paying fees until October 1, 2014, when fees will commence being assessed under the DQSA.

Interim Reporting Requirements for Registered Outsourcing Facilities
Under the DQSA, registered outsourcing facilities must report information to FDA regarding the drug products that they compound. The reports must be submitted twice a year, in June and December, and must list all of the drug products compounded at the facility during the previous six months. Guidance for Industry — Interim Product Reporting for Human Drug Compounding Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act addresses these reporting requirements.

The guidance states that the biannual reports must contain the following information for each drug product compounded at the facility:

• Active ingredient and strength of active ingredient per unit;
• Source of the active ingredient (bulk or finished drug);
• NDC number of the source drug or bulk active ingredient, if available;
• Dosage form and route of administration;
• Package description;
• Number of individual units produced; and
• NDC number of final product, if applicable.

For a facility that submits its initial registration before June 2, 2014, the first biannual product report must be submitted no later than two months after its registration date. Eventually facilities will be required to submit the product reports in SPL files, but FDA does not currently have the infrastructure to handle such submissions, so for now facilities should email the reports to edrls@fda.hhs.gov as Excel spreadsheets. FDA will issue an amended guidance alerting outsourcing facilities when they must begin submitting their reports as SPL files.

Compounding Facilities that Remain Under State Regulation
In Guidance for Industry — Pharmacy compounding of Human Drug Products Under Section 503A of the Federal Food, Drug, and Cosmetic Act, FDA addresses compounding pharmacies that do not register as outsourcing facilities and discusses the Agency’s current thinking with respect to the requirements that apply to these facilities and the products that they compound.

The draft guidance also withdraws FDA’s prior guidance documents on human drug compounding and reiterates FDA’s expectation that state boards of pharmacy will continue to oversee and regulate “traditional pharmacy compounding,” though FDA will continue to be involved in enforcement activities against traditional compounding pharmacies that violate the FD&C Act. More specifically, FDA will employ a risk-based approach to enforcement that prioritizes FD&C Act violations that pose the most significant health risks.

Discussion
Some have expressed skepticism regarding the impact that the DQSA will have on FDA’s ability to oversee and regulate human drug compounding due to the voluntary nature of the new “outsourcing facility” registration scheme. However, the FDA’s issuance of three guidance documents within days of the DQSA’s passage strongly suggests that the regulation of human drug compounding is a top priority for the Agency. Indeed, on the heels of the deadly fungal meningitis outbreak in 2012, it should come as no surprise that FDA is strongly encouraging healthcare providers to purchase only compounded drugs that have been mixed by registered outsourcing facilities, since these facilities must comply with FDA’s cGMP regulations and are subject to FDA’s oversight, including inspections. 

Moreover, compounding facilities that do not register as outsourcing facilities may not compound drug products without a valid prescription. This limitation may well incentivize more compounding facilities to complete the voluntary registration process in spite of the $15,000 annual registration fee and the increased FDA oversight.

Comments on the three draft guidances should be submitted by February 3, 2014. CP

---

Sheldon Bradshaw & Sharon Bradley
Hunton & Williams LLP

Sheldon Bradshaw is partner in the Washington, D.C. office of Hunton & Williams LLP (www.hunton.com) and a member of the firm’s Food and Drug Practice. He can be reached by email at sbradshaw@hunton.com. Sharon Bradley (sbradley@hunton.com) is an associate in the firm’s Food and Drug Practice.