Industry Submits Comments (Nearly 3000) and the Agency Listens: Revised Draft Standard MOU Addressing Section 503A’s Limits on Interstate Shipments of Compounded Medications

FDA’s Commissioner Scott Gottlieb, M.D., announced last Friday, September 7, 2018, FDA’s publication of its revised draft Memorandum of Understanding (“MOU”) between states and FDA addressing interstate shipment of compounded medications. This is the third draft MOU published by FDA that involves interstate shipment of compounded medications; recall FDA’s first attempt was way back in 1999 (which received over 6,000 comments) (see our previous post here). FDA’s third attempt is quite different than its first two attempts both in terms of its definition of what is an “inordinate amount” of compounded products shipped interstate, and how States and FDA are supposed to regulate those compounders that may ship inordinate amounts of compounded medications interstate.

Section 503A of the Federal Food, Drug, and Cosmetic Act (“FDCA”) requires FDA and states to enter into a MOU (developed in consultation with the National Association Boards of Pharmacy (“NABP”)) that addresses the distribution of inordinate amounts of compounded drug products interstate, and provides for appropriate investigation by a State agency of complaints relating to compounded drug products distributed interstate. See FDCA Section 503A. If the State does not enter into the MOU, then that State’s compounders are significantly limited to a ceiling of distributing or dispensing only 5% of their compounded medications interstate. FDA will not enforce this so-called 5% rule unless and until the MOU is finalized and made available to the States for their consideration and signature. FDA is proposing a 180-day period at this point to allow States to consider and sign the final MOU, but that period is subject to comment and may change upon publication of the final MOU.

New Definition of ”Inordinate Amounts”: The “50 Percent Threshold”

The purpose of the draft MOU remains generally the same: It sets forth how and when States must investigate and report to FDA compounding complaints, adverse events and compounders that ship interstate “inordinate amounts” of compounded medications. Unlike prior versions, the new draft MOU appears to be more of a practical, risk-based information collection and reporting guideline, and sets an “inordinate amount” threshold for further investigation, and not a “limit.”

For example, with respect to an “inordinate amount” determination, States do not simply “report” pharmacies and compounding physicians to FDA once they reach a certain limit on compounded medications shipped interstate (which was proposed to be 20% in 1999 and 30% in 2015). Instead the MOU would require states to do the following:

• Identify on an annual basis, using surveys, reviews of records, or other available mechanisms, compounding pharmacists that distribute inordinate amounts of compounded drugs interstate by collecting information regarding the following:
  • Total number of prescription orders for compounded drug products distributed or dispense intrastate, and
  • Total number of prescription orders for compounded drug products distributed interstate.
• If the state becomes aware of a physician who is distributing compounded drug products interstate, coordinate with the State’s appropriate regulator of physician compounding using similar state collection of:.
  • Total number of prescription orders for compounded drug products distributed or dispense intrastate, and
  • Total number of prescription orders for compounded drug products distributed interstate.
• For pharmacies or physicians that have been identified as distributing inordinate amounts of compounded drug products interstate, collect information regarding the following:
  • Total number of prescription orders for sterile compounded drugs distributed interstate
  • Number of States in which the compounded pharmacy or physician is licensed or into which the compounding pharmacy /physician distributes
  • Whether the state inspected for or found during the most recent inspection that the pharmacy /physician distributed compounded products without a prescription.
• Notify FDA if the State identifies any pharmacy or physician within its jurisdiction that has distributed inordinate amounts interstate; and
• Provide FDA certain information identified in the MOU that the State collected concerning those physicians and pharmacies it believes are distributing inordinate amounts interstate.

And here is the proposed definition of “inordinate amount”:  The revised MOU draft states that a pharmacy or physician is considered to have distributed an inordinate amount interstate if the number of prescription orders for compounded drug products in any calendar month is greater than 50 percent of the number of prescription orders for compounded drug products dispensed or distributed both interstate and intrastate.

The calculation includes only compounded drug products, unlike the 2015 draft where it included both compounded and finished drug products.

Concerning use of the term “distribution,” FDA states it revised this definition from the prior draft based on industry comments and that “distribution” now means:

[A] compounder has sent a compounded drug product out of the facility in which the drug is compounded. This may include but not be limited to delivery or shipment to a physician’s office, hospital or other healthcare setting for administration, and dispensing the drug product by sending it to a patient for a patient’s own use.

Based on comments received, FDA also has proposed to exclude from the definition of “distribution” the act of “dispensing that occurs at the facility in which the drug was compounded.” This act of “dispensing but not distribution” will not be a prescription that is included in the pharmacy’s “50 percent threshold” determination. Thus, FDA seems to differentiate dispensing and distribution, at least to some degree, according to whether the transaction is via mail or occurs in person. We shall see whether FDA’s explanation is now satisfactory or whether this issue will continue to provide controversial fodder and frustration for those in the industry that believe a plain reading of FDA’s regulations and the statute plainly demonstrates that “dispense” and “distribution” are different concepts than FDA’s proposed “new” definitions here.

The general takeaway for this blogger on the MOU saga, however, is that FDA’s new draft leaves more leeway to States to collect information necessary to make inordinate amount determinations, investigate its pharmacies, and report certain pharmacies that compound inordinate amounts to FDA. Unlike the former draft, FDA states it does not intend to take action against a compounder that breaches a 50 percent threshold, but instead it proposes that States collect information identified above, and provide it to FDA to help “inform FDA’s inspectional priorities.” The proposed draft would require States to maintain records of complaints, investigations, and responses to the same for at least three years after completion of the investigation. FDA notes that the revised draft does not include “specific directions to the States on how to conduct their investigations of complaints. Rather, as recommended by comments to FDA previously, the details of such investigations are left to the States’ discretion.”

FDA is also distinguishing between compounders of non-sterile and sterile compounds in light of the fact that it is collecting information of the types of compounds to likely assist with its risk-based enforcement approach (recognizing the significantly different risk profiles for these products). FDA’s continued quest to know whether compounders of “inordinate amounts” are obtaining valid individually identified patient prescriptions demonstrates FDA will be watching this issue.   States must consider whether compounders that may exceed the 50 percent threshold are also falling short of the individually identified prescription requirement in 503A. Comments are due in 90 days.

States must notify FDA within three business days (versus the former proposed 72 hours) after receiving any complaints related to a compounded product distributed interstate involving a serious adverse product quality issue or adverse drug experience, and provide FDA with specific information about the complaint. FDA states it has staff on call 24 hours a day to receive information in emergency situations.