The New Federal Compounding Law

 In Practice Building

Compounding Problems for Your Practice and Patients?

Mike Corrado

This past November, Congress passed – and the president signed into law – the Drug Quality and Security Act (HR 3204). The impetus for federal involvement was the sale in 2012 of tainted sterile compounds to clinics and hospitals in 23 different states. This law is also the culmination of a decades-long attempt by the US Food and Drug Administration (FDA) to improve the safety of compounds and take regulation of compounding pharmacies away from state boards of pharmacy.

Arizona is home to over 700 licensed naturopathic physicians, and they represent a large portion of everyday business at our pharmacy. Naturopathic practices and their patients who depend on the services of compounders – all 3 corners of the “patient care triad” – will be influenced by HR 3204. Anyone who utilizes the services of a compounding pharmacy should be prepared for change.

What the New Law Means

To begin, the law creates 2 different types of compounders: Outsourcing facilities (OFs), which will be overseen by the FDA, and “traditional” compounders, which will remain the jurisdiction of state boards of pharmacy. There will be different rules and regulations governing how each type of compounder operates, and what they will be able to compound and market (see Table 1).

Outsourcing Facilities (OF)

An outsourcing facility, or Section 503(b), is an entity that voluntarily registers with the FDA to compound and distribute sterile medications. OFs do not have to be a pharmacy; however, their operation must be overseen by a licensed pharmacist. OFs must submit to the FDA a list of medications they intend to compound for the following year in advance, and also submit a list of compounds they have already compounded in the previous 6 months. OFs will be allowed to sell compounds without a prescription, also known as “office-use,” and will be allowed to sell compounds across state lines without restrictions. They will be required to comply with cGMPs (Current Good Manufacturing Practices), and the FDA will have full access to all paperwork, prescriptions, and facilities of OFs. As of the writing of this article, 37 compounders have registered as OFs.

“Traditional” Compounders

Also known as Section 503(a) Compounders (in reference to the Federal Food, Drug and Cosmetic Act), traditional compounders may only compound medications based upon a prescription for an “identified individual patient”; therefore, traditional compounders cannot sell ANY Compounds for “office-use.” They will continue to be overseen by state boards of pharmacy, may compound in advance of a prescription in “limited quantities” based upon a history of receiving prescriptions from a provider or patient, and may compound medications that are “essentially copies” of commercially-available drugs if the compound provides a therapeutic benefit to the patient. Additionally, traditional compounders may be limited in shipping compounds across state lines to 5% of the total number of prescriptions they fill, that is unless the state where the compounder resides enters into an agreement with the FDA, known as a Memorandum of Understanding (MOU).

What Can Be Compounded?

HR 3204 also limits what can and cannot be compounded to the following:

  1. Bulk drug substances must have a USP (United States Pharmacopeial Convention) or NF (National Formulary) monograph, OR…
  2. Ingredients must be part of a currently marketed drug, OR…
  3. Compounds must appear on a list generated by the FDA, based upon clinical need (also known as a “Positives” list – this list will be generated for each type of compounder)
  4. A “Negatives” list of prohibited compounds already exists, and this list will be expanded
  5. A new category of prohibited compounds called “demonstrably difficult to compound” will be generated

A Compounding Pharmacy Advisory Committee, consisting of pharmacists, physicians, members of industry, and patient/public health advocacy groups will be created to determine exactly which bulk drug substances and formulations will be permitted.

Table 1. Summary of Compounders

Traditional Compounders / Section 503(a) Outsourcing Facilities / Section 503(b)
Applies to ALL compounders New type of sterile “manufacturer”
Require prescriptions for “identified individual patients” “Office-use” compounds allowedSubject to FDA oversight
Limits compounding to:

  • Commercially-available drugs
  • Some bulk APIs
  • “Demonstrably difficult to compound”
Limits compounding to:

  • Commercially-available drugs
  • Bulk APIs from an approved list
  • “Demonstrably difficult to compound”
Limits interstate distribution (MOU) Not subject to MOU limitations
Must comply with cGMPs

(API = Active Pharmaceutical Ingredients; cGMP = Current Good Manufacturing Practices; MOU = Memorandum of Understanding)

What’s The Deal With These Lists?

The FDA imposed a deadline of March 4, 2014 for submission of nominations of bulk drug substances to the “Positives,” “Negatives,” and “demonstrably difficult to compound” lists. Trade organizations such as the International Academy of Compounding Pharmacists, AANP, and the Professional Compounding Centers of America, as well as physicians, compounders, and manufacturers throughout the country, have submitted lists of thousands of bulk drug substances (Active Pharmaceutical Ingredients, or APIs) and formulations that they would like the FDA to allow or to prohibit from future compounding.

One potential problem for naturopathic physicians is this: Many of the compounds used in naturopathic offices, particularly sterile injectables, use APIs that neither have a USP/NF monograph nor are part of a currently-marketed, FDA-approved drug. Unless the FDA adds these to the “Positives” lists for each type of compounder, they will no longer allow compounders to make or market them. For example, methylcobalamin has neither a USP nor NF monograph, nor is it part of a currently-marketed drug in the United States. There are many other substances used in naturopathic medicine, including choline and glutathione, which only have dietary supplement monographs. Once again, unless permitted by the FDA, compounders will no longer be able to utilize these bulk drug substances in making compounds.

Of particular concern to naturopathic physicians should be the “demonstrably difficult to compound” list. These are APIs or formulations that, based upon the way they are made, the equipment utilized, or the training or testing required, could render a compound “unsafe for use.” First, it should be self-evident that compounders are not the ones seeking to limit what they can make. So, who exactly is interested in restricting these compounds? Second, for whom is this compound “difficult” – a highly trained, experienced compounder, or a marketing consultant with no pharmacy degree, like me? Lastly, since this list involves formulations, it could potentially encompass a number of compounds used by naturopathic physicians, such as sustained-release formulations or preservative-free compounded injectables, for which there are no commercially-available substitutes.

Be Prepared For Change

As you have seen, while many of the regulations of this new law took effect immediately, many others have yet to be decided. As the marketing rep for our pharmacy, I view change not as a problem but as opportunity – you should too! Take advantage of this opportunity by being prepared:

  1. Remain calm! Many regulations and requirements are still to be decided, so continue to treat your patients as you are currently doing.
  2. Please remember that the goal of this legislation is increased patient safety. Compounders may have to expand in order to meet new compounding or manufacturing standards. Additional testing of sterile injectables to ensure patient safety may cause delays in delivery, and you may see changes in “use-by” dates. Labeling changes are a certainty. Higher costs for compounders may mean higher prices.
  3. Identify what type of compounders you are using. Are they an “OF” or “traditional” compounder? Can you purchase from them without a prescription, or are prescriptions for individual patients required? Be prepared to supply full prescription information for ALL compounds, should you be using a traditional compounder.
  4. Stay informed! Your relationship to the compounders that you and your patients use is critical to determining what changes are coming and when they will take effect. You already use compounders as a resource for making the optimal compounds with which to treat your patients; count on them as a resource for understanding HR 3204 as well. The compounders you use may have to change the way they conduct certain aspects of their business, so please be mindful and understanding of what is being required of them pursuant to this new federal law. Don’t be surprised if your compounder tells you that federal and state laws conflict with each other.
  5. “Traditional” compounders may face restrictions on the number of compounds they can ship across state lines. This could affect your practice and patients in several ways. For example:
    • If the traditional compounder you utilize is located in another state than where your practice is located, you will no longer be able to purchase “office-use” compounds from them, or they may be limited in how many prescriptions they can ship out-of-state. Finding a local “traditional” compounder that makes both sterile and non-sterile compounds is a good idea.
    • Patients who reside in several states may not be able fill prescriptions for their compounds from a single source. You may need to assist out-of-state patients in finding compounders in those states in which they reside.
  1. If you are prescribing compounds that could be deemed “essentially copies” of commercial medications, you MUST provide (directly on your prescription) the therapeutic reason you utilize the compound instead of the commercial product. For example, if your patient requires a sterile compound that is preservative-free, and the similar commercial product is not, you must list that reason on your prescription. The fact that a compound may be less expensive than its commercial counterpart is NOT a therapeutic benefit for using the compound. Make sure you document your use of this type of compound in patient charts.
  2. Write, call, fax, and email your congressman and senators. They need to hear about your practice, the way you treat patients, and how this will be affected by implementation of HR 3204. Do not take it for granted that legislators comprehend how and why you practice naturopathic medicine.

Make no mistake – change is coming! But remember that we are ALL in this together. Maintaining communication between all 3 parts of the “patient care triad” – physicians, patients, and pharmacy – is now more critical than ever.

SONY DSCMike Corrado is the marketing consultant for Civic Center Pharmacy in Scottsdale, AZ. A graduate of New York Institute of Technology with degrees in business and marketing, Mike has worked as a sales and marketing rep in healthcare for nearly 25 years, and is a member of the International Academy of Compounding Pharmacists (IACP). He can be reached at [email protected].


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