Compound Interest - Our Two Cents

We read the Law 360 piece yesterday (subscription required) on the now-commenced congressional hearings concerning the FDA’s oversight of compounding pharmacies in the wake of the New England Compounding 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 we can say this about the FDA’s regulatory oversight capacity in this area.

We think that the FDA already has plenty of regulatory authority to treat large-scale compounding pharmacies as “manufacturers” where circumstances warrant.  See 21 U.S.C. §353a(a-f).  In particular, the FDA has authority to regulate pharmacy compounding in “inordinate amounts” and to limit compounding to 5% of total orders.  Id. at §§353a(b)(1)(D); 353a(b)(3)(B)(ii).  These and other provisions are directed to the very real problem of such pharmacies becoming sub rosa drug manufacturers.

The problem is not the law, but that, in exercising that 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 as well.  See 21 U.S.C. §353a(c) (prohibiting advertisement).  But instead of directly regulating the scale of pharmacy compounding, the FDA chose to regulate through prohibitions on advertising.  Not surprisingly, the FDA was hammered by the Supreme Court, and that form of regulation was declared unconstitutional.  See Thompson v. Western States Medical Center, 535 U.S. 357 (2002).

After Thompson, however, the FDA made noises about updating its compounding enforcement procedures in light of the First Amendment, but after soliciting comments, 67 Fed. Reg. 34942 (FDA May 16, 2002), the Agency didn’t do 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 compound drugs violated commercial free speech rights. That was nice.  There were many comments.  And then?  The FDA failed to take action, publish its views, 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 getting overly self-important when we start quoting ourselves).

Instead, the FDA issued a Guidance entitled “Sec. 460.200 Pharmacy Compounding” in 2002.  See 2002 WL 32811463.  Here’s the post-Western States regulatory structure the FDA decided to utilize:

However, when the scope and nature of a pharmacy’s activities raise the kinds of concerns normally associated with a drug manufacturer and result in significant violations of the new drug, adulteration, or misbranding provisions of the Act, FDA has determined that it should seriously consider enforcement action.  In determining whether to initiate such an action, the Agency will consider whether the pharmacy engages in any of the following acts:

1. Compounding of drugs in anticipation of receiving prescriptions, except in very limited quantities in relation to the amounts of drugs compounded after receiving valid prescriptions.

*          *          *          *

6. Using commercial scale manufacturing or testing equipment for compounding drug products.

7. Compounding drugs for third parties who resell to individual patients or offering compounded drug products at wholesale to other state licensed persons or commercial entities for resale.

8. Compounding drug products that are commercially available in the marketplace or that are essentially copies of commercially available FDA-approved drug products.  In certain circumstances, it may be appropriate for a pharmacist to compound a small quantity of a drug that is only slightly different than an FDA-approved drug that is commercially available.  In these circumstances, FDA will consider whether there is documentation of the medical need for the particular variation of the compound for the particular patient.

9. Failing to operate in conformance with applicable state law regulating the practice of pharmacy.

2002 WL 32811463, at *2-3 (emphasis added).

So there, the FDA has all the tools to deal with the problem of excessive compounding – and to boot, the FDA has believed, since 2002, that it can enforce state-law violations as well.  It just hasn’t done it.  The FDA might have 99 other problems, but authority isn’t one of them.

Basically, with pharmacy compounding, the FDA tried a form of unconstitutional regulation, and after drawing back a nub from Supreme Court, left all the other tools the statute provides lying about unused.  That’s unlike the DEA, which has shifted its prosecution efforts (involving the drug subset of “controlled substances”) to the non-speech-related parts of the statute that raise no constitutional objections.  See 71 Fed. Reg. 16593, 16595-96 (DEA Apr. 3, 2006).

In sum, the FDA already has power to regulate pharmacy compounding concerns without impinging upon the First Amendment rights of regulated parties.  It should use that power.  Then the agency should sit down and undertake the same constitutionally-required revisions to its policies concerning off-label use – rather than again being forced to do so by the courts.