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Key Takeaways from FDA's New Guidance for Prescription Drug Compounders

On April 15, 2016, the Food and Drug Administration (FDA) released draft guidance that describes the FDA's interpretation of drug compounding standards under Sections 503A and 503B of the Food Drug & C osmetic Act (FD&C Act). The three guidance documents apply to compounding activities of hospital pharmacies, non-hospital pharmacies and outsourcing facilities. While the guidance does not establish legally enforceable responsibilities, it reflects the FDA's current thinking and recommendations on these topics.

Key takeaways from the guidance include:

  1. The guidance clarifies that Section 503A entities should not distribute compounded drugs without a valid prescription for an identified patient. The guidance also addresses the requirements of the limited quantity exception.

  2. The guidance recommends that non-503B compounding pharmacies may only distribute those medications to other entities within a one-mile radius owned and controlled by that pharmacy. These prescriptions should also be compounded pursuant to a patient-specific order and can only be administered within the facility.

  3. The guidance also reiterates that all drugs compounded at a single geographic location of an outsourcing facility must meet the requirements of 503B.

Facilities that engage in drug compounding should contact experts to submit comments on the draft guidance, due July 14, 2016.

Summary of Draft Guidance

1. Prescription Requirements under Section 503A of the FDA

This guidance explains the FDA's policies concerning prescription requirements for compounding drug products for identified individual patients under Section 503A of the FD&C Act. This guidance addresses: (1) compounding after the receipt of a prescription for an identified individual patient; (2) compounding before the receipt of a prescription for an identified individual patient or "anticipatory compounding"; and (3) compounding for office use or "office stock."

In the guidance, the FDA interpreted "valid prescription order" as "a valid prescription order from a licensed physician or other licensed practitioner authorized by state law to prescribe drugs." The prescription should also identify the patient for whom the drug has been prescribed.

After receipt: The FDA stated that unless a product is compounded before the receipt of a valid prescription, to qualify for the exemptions, the drug product must be compounded after the pharmacist or physician receives a valid prescription order for an individual patient.

Before receipt: Further, the drug product can be compounded before receipt for such a patient only if: (1) compounding is based on a history of the pharmacist or physician receiving valid prescription orders for the compounding of the drug; and (2) orders are generated solely within an established relationship between the pharmacist or physician and either the patient or the prescriber.

Limited Quantity: In addition, the FDA commented on the parameters of the limited quantity exception. The FDA stated that a compounder will not exceed the limited quantity exception so long as it holds for distribution: (1) no more than a 30-day supply of a drug product to fill valid prescriptions it has not received; and (2) the amount of supply is based on the number of valid prescriptions that the compounder has received for identified individual patients in a 30-day period over the past year.

Office Stock/Office Use: The FDA further recommended that only outsourcing facilities can compound and distribute non-patient specific drug products to hospitals, clinics and other health care practitioners for office use. In other words, the FDA recommends that pharmacies that are compounding drugs pursuant to Section 503A are not permitted to distribute drugs before receiving a prescription.

Anticipatory Compounding: Further, the FDA stated that anticipatory compounding can occur in limited quantities, so long as a licensed pharmacist or physician compounds a drug in advance of receiving a valid prescription order for an identified individual patient in order to have a supply of the drug ready for a patient.

2. Hospital and Health System Compounding under the FDA

This guidance document addresses how the FDA intends to apply Section 503A to drugs compounded in state-licensed or health system pharmacies for use within the hospital or health system.

The guidance clarifies that the FDA does not intend to take action if a hospital pharmacy distributes compounded drugs without receiving a patient-specific prescription order provided that: (1) the drugs are only distributed to health care facilities within a one-mile radius under the same entity that owns and controls the hospital pharmacy; (2) the drugs are only administered to patients within the health care facilities (no self-administration); and (3) the drugs are compounded in accordance with 503A and other requirements of the FD&C Act.

The guidance also reiterates that hospital pharmacies that want to distribute compounded drugs outside of the one-mile scope without receiving a valid prescription order should comply with Section 503B of the FD&C Act.

3. Facility Definition under Section 503B of the FDA

This guidance is intended for entities that are registered with the FDA as an "outsourcing facility" under Section 503B of the FD&C Act. Section 503B defines an outsourcing facility as "a facility at one geographic location or address." This guidance addresses stakeholder questions regarding the meaning of "facility," such as whether multiple suites used for compounding human drugs at a single street address constitute one or more facilities, or whether a single location where human drugs are compounded can be subdivided into separate operations compounding under different standards.

Section 503B defines an outsourcing facility as "a facility at one geographic location or address." In the guidance, the FDA interpreted this to mean a "business or other entity under one management, direct or indirect, engaged in human drug compounding at a geographic location or street address." Further, the FDA considers all activities, equipment, appurtenances, and materials part of such a 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.

Thus, the guidance clarified that even if an outsourcing facility divides its site at one street address into multiple sections with physical barriers, or in different hoods or different rooms, all of the drug products compounded at that street address must satisfy the conditions of 503B or none of the outsourcing drug products would qualify for the exemptions in Section 503B.


© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume VI, Number 126


About this Author


Colleen Faddick's practice includes advising clients regarding the structure of and relationships among health care providers and entities within the complex federal and state regulatory environment. Colleen focuses on Medicare and Medicaid reimbursement and enrollment issues and appeals, fraud and abuse and self-referral law issues, licensing and certification of health care entities, clinical trial compliance and agreements for sponsors and providers, medical device payment and manufacturer relationships with physicians. Colleen works with hospitals, large physician...