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I am pleased to share the FDA’s 2018 Compounding Policy Priorities Plan. This plan provides an overview of the key priorities our agency will pursue to implement the federal law on compounding and to advance the FDA’s public health mission. As we undertake these steps, we must continue to recognize the importance of compounders’ role in providing quality drugs so that patients have access to the medicines they need. We will clarify and appropriately tailor the policies for traditional compounding pharmacies and the outsourcing facilities that may supply a broader market.

Most of these priorities are well underway. Several draft and final guidances outlined in this plan were announced today. Others parts of this plan will be rolled out over the course of the coming year. We plan for all of the commitments made under this plan to be completed in 2018.

Background

A key aspect of the FDA’s mission is to ensure that medicines for patients are made according to appropriate quality standards. Five years ago, Congress, the FDA, state regulators and health care practitioners across the country grappled with the largest health care-related outbreak in recent history.

The 2012 outbreak of fungal meningitis, resulting from a pharmacy that shipped contaminated compounded drugs throughout the country, led to more than 750 cases of illness and 60 deaths in 20 states. The tragic proportions of this outbreak were mainly attributable to the company’s large-scale, multistate distribution of an injectable drug intended to be sterile that had been prepared under inappropriate conditions. This outbreak, combined with the FDA’s continued concerns based on monitoring pharmacy compounding, underscored the need for improvement in compounding practices. It also highlighted the need for more robust oversight of compounders, close federal and state collaboration and a clear legal framework that would provide for compounding to meet patients’ medical needs, while also providing the FDA with tools to address unlawful practices that threaten public health.

Further, it became apparent that it was necessary to better define and separate the legitimate practice of pharmacy compounding from a growing number of enterprises that were acting as large-scale drug manufacturers seeking to operate outside of the purview of FDA oversight by operating under the guise of a pharmacy license. These outfits often created substantial risk in the process by manufacturing and shipping large quantities of purportedly sterile drugs and not adhering to good manufacturing practices.

Congress addressed these challenges and affirmed the FDA’s role in applying its mission to compounded drugs by passing the Drug Quality and Security Act (DQSA) in November 2013.

Of particular note, DQSA created a new category of compounders, called outsourcing facilities, which may engage in larger-scale, nationwide distribution with associated higher risks. DQSA sets forth a framework for pharmacy compounders and outsourcing facilities to compound drugs for patients when FDA-approved drugs are not available to meet patients’ clinical needs. The law sought to balance the important role for the practice of pharmacy compounding with the need to promote the quality of compounded products, which pose greater risks to patients because they have not undergone premarket review for safety, efficacy and certain manufacturing controls.

Because of the profound public health implications, the FDA’s compounding program is a priority for the agency and the FDA is committed to implementing the DQSA framework. During the last four years, we have made great strides in DQSA implementation through significant policy development, robust inspection and enforcement actions and strong collaboration with state regulators. We also have communicated actively with key stakeholders, allowing us to obtain important input and advice on scientific, technical and medical issues concerning drug compounding and related activities.

Our 2018 compounding policy priorities plan lays out how the agency will implement certain key provisions of DQSA and other provisions of the law relevant to compounders over the course of the coming year. Our policy will be part of a series of draft and final guidance documents, proposed and final rules and a revised draft memorandum of understanding (MOU) between the FDA and the states.

Specifically, this plan lays out how we will address quality standards for outsourcing facilities; regulate compounding from bulk drug substances; restrict compounding of drugs that are essentially copies of FDA-approved drugs; solidify the FDA’s partnership with state regulatory authorities; and provide guidance on other activities that compounders undertake. We know that to fulfill our public health mission, we need to keep in mind the critical role that compounding has played in meeting patient needs and that we must work with the compounding community to continue to develop an appropriately balanced approach to regulation. As part of our plan, we will continue to help protect patients from harm by taking a strong, proactive approach toward enforcement and ensuring compliance with the law.

2018 COMPOUNDING POLICY PRIORITIES

As we meet our obligations under DQSA, we will balance the need to preserve access to appropriately compounded drugs for patients who have a medical need for these products with the need to help protect patients from poor quality compounded drugs that could cause harm. At the same time, we’ll continue to take steps to preserve the new drug approval requirements that obligate sponsors to demonstrate that drugs are safe and effective for their intended purpose before they can be lawfully marketed.

Risk-Based Approach to Manufacturing Standards for Outsourcing Facilities

As amended by DQSA, the Federal Food, Drug and Cosmetic Act (FD&C Act) provides two pathways for lawful compounding under the Act. Under one pathway, in section 503A, state-licensed pharmacies, among others, compound drugs pursuant to patient-specific prescriptions (referred to as “503A facilities” or as “traditional compounders”). Under the other pathway, in section 503B, drugs are compounded by a new category of compounders called outsourcing facilities (or “503B facilities”) according to heightened statutory requirements relative to the 503A facilities.

For example, drugs produced by outsourcing facilities must be compounded in compliance with current good manufacturing practice (CGMP) requirements and in an FDA-registered facility that is subject to regular, risk-based inspections. Information on the products compounded at outsourcing facilities, including the source of the active ingredients used, must be reported to the FDA.

Other conditions also must be met under section 503B, including reporting adverse events and labeling products with certain information. Outsourcing facilities that meet these conditions may compound drugs that are not necessarily in response to patient-specific prescriptions, whereas 503A facilities may not.

To further describe the operating parameters for outsourcing facilities, and promote the ability of compounding pharmacies to efficiently meet the more stringent production standards, we plan to take several steps. Our policy goal is to make it more efficient and lower cost for more compounding pharmacies to voluntarily meet the higher production standards for 503B outsourcing facilities as a way to promote more patient access to higher quality compounded medicines.

The FDA plans to issue proposed regulations on CGMP requirements that these outsourcing facilities must meet. In the interim, the agency is revising the draft guidance to describe a new flexible, risk-based approach to CGMP requirements for outsourcing facilities. The policies described in the revised draft guidance will consider how CGMP requirements should be applied in light of the size and scope of an outsourcing facility’s operations. We anticipate that in response to these new, more flexible policies, certain smaller compounders that compound limited volumes of drugs, and presumably present lower risks, may decide to register as outsourcing facilities, which will allow them to compound drugs with or without patient-specific prescriptions under section 503B. Our goal is for more compounders to register as outsourcing facilities with the understanding that they can still meet the FDA’s core requirements for drug quality, based on the size and scope of their compounding operations.

Like the 2014 draft guidance, our revised draft guidance also will describe the circumstances under which the FDA generally does not intend to enforce against outsourcing facilities certain CGMP requirements applicable to conventional drug manufacturers. Based on the comments we received to the FDA’s 2014 draft guidance, the new draft revised guidance will address standards critical to producing a high-quality product, while balancing appropriate flexibility. We believe that these additional steps will make it more feasible for smaller compounders to register and compound drugs as outsourcing facilities.

Ultimately, the goal is to increase patient access to medically necessary compounded drugs from outsourcing facilities, which are subject to higher quality standards and oversight than 503A facilities.

Restricting Compounding of Drugs that are Essentially Copies of FDA-Approved Drugs

A critical component of the FD&C Act is its restrictions on compounding drugs that are essentially copies of FDA-approved or commercially available products. Today, the FDA has issued two final guidance documents regarding the copies provisions for 503A and 503B facilities, respectively.

These provisions of the law are an important mechanism to protect both public health and the premarket approval process. These restrictions are intended to ensure that drugs are not compounded for patients who could use an available, FDA-approved product. Even when drugs are compounded in accordance with section 503A or 503B of the FD&C Act, they have not undergone FDA premarket review for safety, effectiveness and quality. They also lack a premarket inspection and finding of manufacturing quality that is part of the drug approval process. Because they are subject to a lower regulatory standard, compounded drugs should only be distributed to meet the needs of patients whose medical needs cannot be met by an FDA-approved drug. This principle was a key feature of the DQSA passed by Congress.

The restrictions on compounding drugs that are essentially copies of approved drugs also protect the incentives for conventional drug manufacturers to pursue research and to develop FDA-approved drugs. Sponsors would be less likely to invest in and seek approval of innovative, life-saving medications if compounders could, after a drug is approved, compound “substitutes” that may be less expensive because they have not gone through the premarket approval process. Sponsors also would be less likely to seek approval of an ANDA for a generic drug if outsourcing facilities were permitted to compound drugs that were essentially copies of approved drugs without going through the ANDA process.

Our policies regarding these provisions carefully balance preserving access to compounded drugs for patients who need them, while preventing compounders from undermining the drug approval process or unnecessarily exposing patients to risks associated with unapproved drugs. This is the careful balance that Congress sought in enacting DQSA and first creating this modern framework. In implementing these policies, we have taken into consideration the concerns from various stakeholders.

As we move toward implementation and enforcement, we intend to focus our initial efforts on education and outreach to practitioners, including prescribers of compounded drugs who can determine whether there is a change between the compounded drug and the commercially available drug, or comparable approved drug, that produces a significant or clinical difference for an individual patient.

We also intend to prioritize review of situations that could adversely impact the public health and premarket approval process, such as compounding using a bulk drug substance to produce a product that can otherwise be made by diluting an FDA-approved drug according to its labeled instructions.

Our goal will be to make sure that patients do not receive compounded drugs unnecessarily when an FDA-approved drug is appropriate to meet their medical needs.

Regulating Compounding from Bulk Drug Substances

503A facilities may compound drugs in accordance with the FD&C Act using bulk drug substances that comply with existing United States Pharmacopeia (USP) or National Formulary monograph standards; are components of FDA-approved drugs; or appear on a list developed by the FDA through regulation, after consultation with USP and the Pharmacy Compounding Advisory Committee (the 503A bulks list). 503B outsourcing facilities may use a bulk drug substance to compound a drug that complies with the FD&C Act if the FDA has determined there is clinical need to compound with the substance and places it on the 503B bulks list, or if the drug compounded appears on the FDA’s drug shortage list.

As an interim step, the agency issued interim policy guidances to address compounding from bulk drug substances by 503A and 503B facilities while we are developing the bulks lists. These temporary policies were designed to address the uncertainty concerning compounding from bulk drug substances that may be used in compounding by 503A and 503B facilities during the interim period in which the agency evaluates bulk drug substances nominated for use in compounding.

The FDA believed this temporary approach was in the best interest of the public health, because it would not prevent outsourcing facilities from compounding with bulk drug substances while the 503B bulks list was being developed. The FDA was concerned that an alternative, interim policy approach would have left all compounding from bulk drug substances to facilities operating under section 503A, which, unlike outsourcing facilities, may compound drugs that are exempt from CGMP requirements, generally do not report adverse events and generally are not subject to risk-based FDA inspection.

The FDA cautions, however, that the exercise of enforcement discretion during this time period for a certain nominated substance consistent with the 503A or 503B interim policies does not reflect a determination that the substance belongs on the 503A or 503B bulks lists or that there is a clinical need under section 503B to compound with the bulk drug substance.

Regarding development of the 503A bulks list, the agency solicited nominations for bulk drug substances to include on the 503A bulks list and presented 48 substances that were nominated to the Pharmacy Compounding Advisory Committee for its input. In December 2016, the agency issued proposed regulations to address 10 of these substances and establish the criteria it will use to evaluate substances for inclusion on the list. After considering public comments, we intend to issue a final regulation. We also will continue our process for evaluating additional bulk drug substances that have been nominated and addressing those substances in proposed regulations.

Regarding development of the 503B bulks list, the agency solicited nominations for bulk drug substances for inclusion on the 503B bulks list. The next step is for the FDA to issue, in March 2018, a draft guidance document that proposes criteria for making clinical need determinations for purposes of establishing the 503B bulks list. The agency has heard concerns about compounding from bulk drug substances when the drug can be compounded from FDA-approved drugs. The FDA intends to address these concerns in its draft guidance document, and it will carefully consider any additional concerns that may be raised during the public comment period for the draft guidance. Health care clinicians and practitioners are especially encouraged to submit comments on the draft clinical needs guidance, so that we receive their feedback on the use of compounded drugs in clinical care and the potential impacts on patient safety.

As the agency develops what we intend to be our policy going forward, we know that many competing concerns will be brought to our attention. The FDA’s decisions will be guided by the conditions set forth in the statute, so that bulk drug substances are placed on the 503B bulks list only when there is clinical need to compound drugs using these substances. This protects patient health and the drug approval process, for example, by helping to ensure that outsourcing facilities do not compound using a bulk drug substance when an FDA-approved drug can be used to meet patient medical needs.

Solidifying FDA’s Partnership with State Regulatory Authorities

To address risks presented by compounded drugs, the FDA is working closely with our state partners on oversight of compounding activities. Our objective is to focus FDA resources on outsourcing facilities and on 503A facilities that present the greatest risks. At the same time, the FDA intends to clarify circumstances in which the agency will look primarily to state partners to oversee certain compounding operations for example because the compounded drugs are being distributed intrastate in response to prescriptions for named patients and fall within what’s commonly viewed as the practice of pharmacy.

Strong partnerships with our state and other public health partners are an essential aspect of our efforts to implement DQSA. Last September, the FDA hosted an annual intergovernmental meeting with the state boards of pharmacy, and in the upcoming months we plan to issue a significantly revised draft MOU between the FDA and the states regarding compounding under section 503A. We received more than 3,000 comments as well as considerable congressional interest in response to the previous draft MOU. The draft MOU will be substantially revised to address many of the concerns we heard.

The draft MOU addresses the percentage of compounded drugs that could be shipped interstate by 503A compounders and state investigation of complaints. Under the draft MOU, if a pharmacy distributes an “inordinate amount” of compounded drug product interstate, the state would agree to take action. FDA had defined “inordinate amount” for states that have entered into the MOU as “an amount of compounded drug product distributed interstate in a given month that is equal or greater to 30 percent of all drug products dispensed or distributed by the pharmacist, pharmacy, or physician.”

Among some of the provisions of the revised draft MOU, the FDA will clarify that a compounder has distributed an inordinate amount of drug interstate if the number of prescriptions of compounded drugs distributed interstate during any calendar month is greater than 50 percent. Instead of serving as a hard limit for state action, the 50 percent would instead trigger certain reporting requirements. The new MOU also would make it more feasible for states to enter into the MOU by providing more time to report to the FDA and greater flexibility in the mechanisms states use to identify inordinate amounts instead of just relying upon inspection records. Under this approach, states will be able to further pursue a risk-based approach, and focus on notifying the FDA of those compounders where the size or scope of the activities merits greater oversight. Our aim is to leave the oversight of traditional pharmacy to states.

The FDA appreciates the critical role that pharmacies play in the U.S. health care system, and we recognize the need to preserve access to compounded drugs for patients who have a medical need for them. We believe that the significantly revised MOU will provide states with additional flexibilities without compromising our shared public health goals.

Once revised and issued in final form, the MOU will serve as an important mechanism for the FDA and the states to come to a mutual understanding about what types of activities are primarily overseen at the state versus federal level, and will help ensure robust communication between the FDA and its state partners. Our underlying goal of the MOU is to make sure that, with respect to 503A facilities, we focus our inspection and enforcement resources on activities that present the greatest risk to patients across many states, while primarily leaving to our state partners routine oversight of those activities that mainly affect patients within their own borders, as well as oversight of compounders that distribute a limited percentage of products interstate, pursuant to valid prescriptions for identified individual patients.

Finalization of Biological Products Guidance and Clarifying Other Policies on Activities that Compounders Undertake

Today, the FDA finalized its guidance, Mixing, Diluting, or Repackaging Biological Products Outside the Scope of an Approved Biologics License Application. This final guidance is a good example of how the FDA is developing policies to reflect the feedback we have received for balancing patient access and public health objectives. In this case, the final guidance describes a mechanism for outsourcing facilities to assign beyond use dates (BUDs) to repackaged biological products that exceed the “default” BUDs of 24 hours, based on data. We heard the concerns about the consequences of adopting a policy with specific caps on BUDs for these products without a means to extend the BUDs.

To address these concerns, we are putting forward a more flexible, science and data-driven policy approach to support patients and their clinicians, while also protecting public health.

As part of our efforts, in the upcoming months, we will further clarify policies applicable to compounding by outsourcing facilities with a guidance on the “definition of a facility” in section 503B. This guidance will address the question of whether an outsourcing facility can be co-located with a 503A pharmacy, and whether an outsourcing facility also can manufacture FDA-approved drugs within the same facility. This guidance will address concerns raised by some stakeholders about when differently situated products were manufactured in the same or nearby facility, and will define more clearly when products intended to be produced under 503A would not be scoped into 503B and a more stringent framework just because they were manufactured near an outsourcing facility. Similarly, the FDA soon will issue final guidance on compounding and repackaging of radiopharmaceuticals by state-licensed nuclear pharmacies, federal facilities and certain other entities, as well as compounding and repackaging of radiopharmaceuticals by outsourcing facilities.

These guidance documents will be followed by revised draft guidance describing examples of conditions that the FDA considers to be insanitary and in violation of the FD&C Act. This guidance will address concerns raised by some providers who compound small quantities of drugs in their offices for patient use, and as part of their routine clinical practice. This came up in the setting of certain dermatological procedures, for example. The FDA plans to better define the circumstances under which we believe drugs are being mixed and applied in a manner that creates negligible patient risk, and therefore wouldn’t be subject to the same compliance policy under the agency’s risk-based approach to implementing these requirements.

We also intend to issue a final rule regarding the additions and modifications to the list of drug products that cannot be compounded because the products or their components have been withdrawn or removed from the market for reasons of safety or effectiveness. The FDA previously issued a final rule with other additions and modifications to that list in October 2016.

Compliance

Monitoring compliance with the law and taking enforcement action when needed will remain a cornerstone of the FDA’s oversight role because of the ongoing and serious risks poorly compounded drugs can pose. Examples of risks include contamination of drugs that need to be sterile because they are entering the bloodstream, as well as drugs that are super-potent and therefore can cause harm. These risks are apparent and are underscored by recent compounding risk alerts that the FDA issued to inform the public of serious concerns with specific compounded products.

Since enactment of the DQSA, the FDA has conducted nearly 500 inspections, issued more than 180 warning letters advising compounders of significant violations of federal law, issued more than 70 letters referring inspectional findings to state regulatory agencies, overseen more than 150 recalls involving compounded drugs and worked with the Department of Justice on multiple civil and criminal enforcement actions.

We recognize the public health imperative to quickly and fully implement federal compounding law and to clearly and proactively communicate our progress in implementing this critical public health law. Our policies will aim to foster the continued development of reliable compounding by traditional compounding pharmacies and outsourcing facilities, so that patients have access to quality compounded drugs when they need them. I look forward to soon sharing more regarding how we will continue to build on our efforts to fully implement the provisions of DQSA and employ strong oversight of compounding as part of our public health mission.

Scott Gottlieb, M.D.

FDA Commissioner

January 2018