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New FDA Draft Compounding Guidance for Pharmacies, Hospitals, and Outsourcing Facilities

Health Law Alert Susan B. Trujillo, Edward D. Rickert

The FDA released draft guidance on Friday, April 15th for compounders across the spectrum —from pharmacies to hospitals to outsourcing facilities. (Click here to review them in greater detail.) There are 90 days to provide feedback and, based on our read of these documents, compounders will have a lot to say.

Guidance Document 1: Prescription Requirement Under Section 503A of the Federal Food, Drug, and Cosmetic Act

For compounding pharmacies, the FDA first reaffirms its position regarding 503A and the timing of when you can compound —after the receipt of a valid prescription for an identified patient or in limited quantities in anticipation of the receipt of a prescription —and states that compounded product cannot be dispensed until a valid prescription is received. The FDA acknowledges that some states may permit a pharmacy to provide compounded products for office use via a prescription without individual patient names, but states that such practices don't meet the requirements of 503A. This will likely come as a surprise for pharmacies in those states and will elicit significant feedback.

The FDA then "recommends" a particular statement be used to properly document when a pharmacist has to call a prescriber for clarification on whether a compound may be needed even though it admits that "in general, it will be clear whether a prescription is for a compounded drug product." Of more significance, the FDA also proposes a policy regarding how much may be compounded in anticipation and sets the limit at no more than a 30-day supply, calculated based on the number of prescriptions received in a 30-day period over the past year. The FDA also proposes requiring a pharmacist to keep records of the calculations it used to arrive at this number. Finally, the FDA notes that pharmacies may not provide office use/office stock to hospitals, clinics, and health care practitioners as pharmacies may only fill prescriptions upon receipt of a valid prescription order. Oddly, the FDA fails to mention here the small concession it makes next in the next draft guidance.

Guidance Document 2: Hospital and Health System Compounding Under the Federal Food, Drug, and Cosmetic Act

Here, the FDA offers some limited concessions to hospitals but those concessions are only a mile wide. The FDA has determined that the risks it associates with compounding in the absence of a prescription are decreased in the hospital setting and proposes permitting hospital pharmacies to provide compounds without first receiving a prescription to its "healthcare facilities" (this term is undefined), but only within a mile radius of the compounding pharmacy. These healthcare facilities must be owned and controlled by the same entity that owns and controls the hospital pharmacy. This is great news for hospital campuses only serving nearby buildings, but for a hospital pharmacy that would want to serve a satellite location more than a mile away, the hospital must use an outsourcing facility to provide any non-patient specific product. If the hospital wants to compound its own product and send it farther out, it will need its own outsourcing facility permit. However, based on the next guidance document, this may be impossible if it wants to locate that facility in the same building as its 503A pharmacy.

Guidance Document 3: Facility Definition Under Section 503B of the Federal Food, Drug, and Cosmetic Act.

For outsourcing facilities, the FDA has taken a very narrow position regarding the interpretation of the word "facility." The term is loosely defined in Section 503B(d) of the FD&C Act as "a facility at one geographic location or address", but the FDA has decided to interpret this to mean a business under one management, direct or indirect, engaged in compounding at a geographic location or street address. It then goes further, noting that it considers all activities and equipment part "of the facility" if they are related to human drug compounding under the supervision of the facility's management "at the same street address, or in the same building, or in buildings located in close proximity to one another."

This proposed policy would effectively ban commonly managed outsourcing facilities and 503As in the same building, even in separate suites or a nearby building, unless the 503A facility follows 503B and CGMP requirements. This will likely come as a great shock to any 503B facilities already registered by the FDA that share management and a building with a 503A facility that doesn't follow 503B and CGMP. It seems as if a commonly managed 503B and a pharmacy compounding under 503A can't even be next door to each other. Under this guidance and the guidance above, a hospital that wanted to open its own outsourcing facility could not put it in the same building or even in close proximity to the hospital's 503A pharmacy unless the 503A pharmacy complied with CGMP and 503B—an expense the hospital likely is trying to avoid or hopefully hasn't constructed already. The FDA did not address what would happen to already-registered facilities, so it will be interesting to see what happens after the industry responds.

Quarles & Brady can answer questions regarding the draft guidance and assist with the preparation and submission of comments to FDA. Please contact Susan Trujillo at susan.trujillo@quarles.com/(602) 229-5318, Ed Rickert at ed.rickert@quarles.com/(312) 715-5139, or your Quarles & Brady attorney for assistance.