The current fungal meningitis outbreak has put a spotlight on compounding pharmacies, and regulators and stakeholders say Congress needs to clarify exactly who should regulate these entities.

The practice of compounding, which has been around for decades, was intended to give pharmacies the ability to produce a product under a doctor's orders when a particular drug wasn't available. It can also allow pharmacists to concoct alternative delivery methods, add flavors, or sidestep any inactive ingredients a patient may be allergic to.

The original intent was for the pharmacy to produce one drug for one patient at the request of one physician.

But compounding pharmacies have slowly grown over recent years -- even industry trade groups are unsure exactly when that began -- and in some cases have started to act like small manufacturers. Companies like the New England Compounding Center (NECC) in Framingham, Mass., ship thousands of vials of product all across the country.

Now industry attorneys, government regulators, and other stakeholders say Congress needs to act to clarify who has authority to regulate such practices. The FDA -- despite clamoring for such power before -- has had most, if not all, of that authority taken away and it now lies with states, where regulations and oversight vary widely.

In a nutshell, pharmacies, including compounders, are regulated by states; drug manufacturers are overseen by the FDA.

The possible problems that can ensue because of the fuzzy line that separates one group from the other came into sharp focus in the past week when fungus-tainted batches of the steroid methylprednisolone acetate made by NECC sparked the meningitis outbreak that sickened and killed people in 12 states.

"It's a gray area because there's no clear standard as to when the pharmacy crosses the line and looks more like a manufacturer than a compounding pharmacy," said Linda Bentley, a Boston attorney with Mintz Levin who advises manufacturers on FDA regulatory law. "I mean, that's a big hole. The problem is that it's hard to know where the edges are."

Compounding Oversight

The FDA's role in overseeing compounding pharmacies has been muddled by legislation and court cases over the years, so now it's difficult for even the agency to understand what -- if any -- authority it has, Joe Cabaleiro, executive director of the standards group the Pharmacy Compounding Accreditation Board, told MedPage Today.

The landmark 1938 Food, Drug, and Cosmetic Act, which outlines the FDA's authority, doesn't mention compounding.

In 1997's FDA Modernization Act Congress specifically mentioned compounding, but it exempted compounded drugs from some of the oversight required for licensing of new drugs provided certain conditions were met.

Charles Raubicheck, partner at Frommer Lawrence & Haug in New York City and head of the firm's FDA law group, explained to MedPage Today that the 1997 changes provided a safe harbor for compounding oversight -- as long as a drug's production quantity was limited, it was based on a valid prescription, and was produced with FDA-approved materials.

The part of the law that gave the FDA authority to regulate marketing practices of compounding pharmacies was declared unconstitutional by the Supreme Court in 2002, after one such pharmacy challenged it.

Different circuit courts ruled the entire compounding section of the law unconstitutional, but the Supreme Court kept all but the promotional portion intact. Legal experts point to the case as an example of the complexities courts have introduced, making it difficult for the FDA to apply the law.

In 2009, the FDA was rebuffed by a Colorado district court when the agency tried to exert its authority over a compounder it believed was acting like a manufacturer. The court ruled the FDA never had a definition of compounding.

Until a clearer definition is put in place, experts believe, the line between compounding pharmacy and small manufacturer is unclear.

"FDA evaluates compliance with the exemption on a case-by-case basis," Raubicheck said. "Compounding pharmacies try to stay within the safe harbor for the drugs."

In at least the steroid/meningitis case, NECC appears to have been acting like a small manufacturer -- operating without FDA oversight -- and producing 17,000 vials of the steroid injection. "This appears to be one of those loophole situations because of the back-and-forth that needs to be addressed," Cabaleiro said.

Growth of Compounding

Compounding pharmacies saw a lot of growth around 2000 when grocery stores and big-box retailers started to build pharmacies in their outlets, said Frances Richmond, PhD, director of the regulatory science program at the University of Southern California in Los Angeles. Smaller, neighborhood pharmacies had trouble competing with their $4 prescriptions.

Those pharmacies needed a way to better compete and saw compounding as an avenue where big retailers couldn't go, she said. Rather than producing one prescription at a time, they could mass-produce certain products and have them ready for orders from hospitals and clinics.

But as compounding grew, state oversight of pharmacies was limited, particularly as the recession shrank states' revenues, Richmond said. The muddied state-federal oversight dynamic and fact that state regulators don't have a grasp of manufacturing regulations also put the states in a bind.

"It really is difficult for them to do the job," Richmond told MedPage Today. "I wouldn't say they've been dropping the ball, but the ball is really slippery."

Raubicheck believes the FDA suspected compounding was on the rise in the 1990s when the agency started pushing for more authority, but the attorney doesn't have data to back up his suspicions. "I know the FDA's interest in the area has grown since the late 1990s," he said.

Experts estimate there are nearly 3,000 compounding pharmacies operating today. "The FDA may not even know how many or where they are," Bentley told MedPage Today. "If it's a drug-manufacturing facility, they have to register with the FDA. There's no such requirement for compounding pharmacies."

FDA Wants Clarification

In a conference call with reporters Thursday, Deb Autor, an FDA deputy commissioner and global regulatory czar, said it's time for regulations to catch up with the modern practice of pharmacies.

"The world has changed a lot since the days of mortar and pestle, and this is the time for pharmacists, for lawmakers, for regulators and for doctors to sit down to grapple with this new model of pharmacy compounding and come up with a regulatory scheme that appropriately controls the risk," Autor said.

One area that needs clarification, she said, is determining when a pharmacy moves beyond compounding one prescription at a time into small-scale manufacturing. Autor said there is "some legal dispute" about the FDA's authority to look at pharmacy records to determine if it's acting like a manufacturer or not.

"In some cases, we are blocked from the threshold determination of the regulatory ability with respect to the compounders," Autor said. "It becomes a bit of a catch-22 in respect to the agency's ability to effectively regulate the pharmacies."

This week isn't the first time the FDA has noted needed action to clarify the federal-state dynamic over compounding oversight. In an October 2003 hearing before the Senate Health, Education, Labor and Pensions Committee on regulation of compounding pharmacies, then-deputy director of the FDA's drug center, Steven Galston, MD, noted the lack of oversight in some cases.

"Limited state resources and varying standards and regulatory requirements are factors that affect the adequacy of state regulation," Galston said at the time. "In addition, there is variability in commitment to regulate pharmacy compounding among the states."

Congress Poised to Step In

Democrats and Republicans have tried to weigh in this week on both the FDA's authority and the meningitis outbreak.

The GOP-led House Energy and Commerce Committee has sought a bipartisan briefing from FDA and CDC officials to gather information about the multistate outbreak.

Reps. Rosa DeLauro (D-Conn.), who sits on the subcommittee that oversees the FDA's budget, and Ed Markey (D-Mass.) each said separately this week they intend to introduce legislation to give the FDA greater authority over compounding pharmacies.

"I believe this outbreak and corresponding recall make clear that strong federal authority is needed over these large-scale compounding pharmacies to ensure that patients receive safe and effective drugs, that we better monitor adverse events associated with these drugs, and that there is a single entity responsible for verifying appropriate marketing and safe drug production," DeLauro wrote in a letter to HHS Secretary Kathleen Sebelius requesting information about the gaps in regulation of compounding pharmacies.

What Needs to Happen

Industry experts provided their summation of what action is needed to prevent this week's debacle from repeating itself:

Congress needs to act to clarify the FDA's authority of compounding pharmacies

States and the FDA should work more closely together

Industry groups should set and enforce voluntary standards

Cabaleiro said pharmacies need to return to traditional compounding: one prescription, one patient.

People could argue that the FDA doesn't do a good enough job policing its safe harbor, but that's also a resource issue for the agency, Raubicheck said. "Just because there's one safety issue doesn't mean the FDA is not doing its job."