Compound Interest - Our Two Cents

To contact us Click HERE

We read the Law 360 piece yesterday (subscription required) on the now-commenced congressional hearings concerning theFDA’s oversight of compounding pharmacies in the wake of the New EnglandCompounding Center/meningitis controversy. We've seen some reports about the testimony.  We can’t say a whole lot about this because of client concerns, but wecan say this about the FDA’s regulatory oversight capacity in this area.
We think that the FDA already has plenty of regulatoryauthority to treat large-scale compounding pharmacies as “manufacturers” wherecircumstances warrant.  See 21U.S.C. §353a(a-f).  In particular, theFDA has authority to regulate pharmacy compounding in “inordinate amounts” andto limit compounding to 5% of total orders.  Id. at §§353a(b)(1)(D); 353a(b)(3)(B)(ii). These and other provisions are directedto the very real problem of such pharmacies becoming sub rosa drug manufacturers.
The problem is not the law, but that, in exercisingthat power, the FDA chose a method that blatantly impinged on the pharmacies’First Amendment rights to advertise their products.  Congress did, of course, pass that aswell.  See 21 U.S.C. §353a(c) (prohibitingadvertisement).  But instead of directlyregulating the scale of pharmacy compounding, the FDA chose to regulate throughprohibitions on advertising.  Notsurprisingly, the FDA was hammered by the Supreme Court, and that form ofregulation was declared unconstitutional. See Thompson v. Western States Medical Center, 535 U.S.357 (2002).
After Thompson, however, the FDA madenoises about updating its compounding enforcement procedures in light of the First Amendment, but aftersoliciting comments, 67 Fed. Reg. 34942 (FDA May 16, 2002), the Agency didn’tdo anything at all – the proposal vanished without a trace.  As we observed in 2010:
[T]he FDA asked for comments in the wake of the Thompson. . . case, which held that the FDA’s ban on advertising compounddrugs violated commercial free speech rights. That was nice.  There were many comments.  And then?  The FDA failed to take action, publish itsviews, or otherwise seek to resolve the questions raised by Thompson.DDL Blog, Thinking Outside the Label (Aug. 30, 2010) (citation and quotation marks omitted) (you know we’re gettingoverly self-important when we start quoting ourselves).

Instead, the FDA issued a Guidance entitled “Sec.460.200 Pharmacy Compounding” in 2002.  See2002 WL 32811463.  Here’s the post-WesternStates regulatory structure the FDA decided to utilize:
However, when the scope and nature of a pharmacy’sactivities raise the kinds of concerns normally associated with a drugmanufacturer and result in significant violations of the new drug,adulteration, or misbranding provisions of the Act, FDA has determined that itshould seriously consider enforcement action. In determining whether to initiate such an action, the Agency willconsider whether the pharmacy engages in any of the following acts:1. Compounding of drugs in anticipation of receivingprescriptions, except in very limited quantities in relation to the amounts ofdrugs compounded after receiving valid prescriptions.*          *          *          *6. Using commercial scale manufacturing or testing equipment forcompounding drug products.7. Compounding drugs for third parties who resell toindividual patients or offering compounded drug products at wholesale to otherstate licensed persons or commercial entities for resale.8. Compounding drug productsthat are commercially available in the marketplace or that are essentiallycopies of commercially available FDA-approved drug products.  In certain circumstances, it may beappropriate for a pharmacist to compound a smallquantity of a drug that is only slightly different than an FDA-approveddrug that is commercially available.  Inthese circumstances, FDA will consider whether there is documentation of themedical need for the particular variation of the compound for the particularpatient.9. Failing to operate inconformance with applicable state law regulating the practice of pharmacy.2002WL 32811463, at *2-3 (emphasis added).

So there, the FDA has all the tools to deal withthe problem of excessive compounding – and to boot, the FDA has believed, since2002, that it can enforce state-law violations as well.  It just hasn’t done it.  The FDA might have 99 other problems, butauthority isn’t one of them.
Basically, with pharmacy compounding, the FDA trieda form of unconstitutional regulation, and after drawing back a nub fromSupreme Court, left all the other tools the statute provides lying aboutunused.  That’s unlike the DEA, which hasshifted its prosecution efforts (involving the drug subset of “controlledsubstances”) to the non-speech-related parts of the statute that raise noconstitutional objections.  See 71Fed. Reg. 16593, 16595-96 (DEA Apr. 3, 2006).
In sum, the FDA already has power to regulatepharmacy compounding concerns without impinging upon the First Amendment rightsof regulated parties.  It should use thatpower.  Then the agency should sit downand undertake the same constitutionally-required revisions to its policiesconcerning off-label use – rather than again being forced to do so by the courts.