United States: Senate HELP Committee Releases Revised Senate Bill Providing Federal Oversight for Compounding Pharmacies

Compounding Legislation Continues to See More Changes

The most significant change under the Revised Senate Bill, like its predecessor, is that the bill includes compounded drugs as a "new drug" under the Federal Food, Drug, and Cosmetic Act.

The Senate HELP Committee has released a revised draft Senate Bill ("Revised Senate Bill"), updating the committee's first proposed compounding bill and signaling the latest push for the U.S. Food and Drug Administration's (FDA) regulation of compounding pharmacies. Like its House counterpart, the Revised Senate Bill is the latest stage in a surge of federal oversight over compounding pharmacies, from issuing warning letters to compounding pharmacies, compounded drug recalls and other enforcement-related actions directed toward compounding pharmacies.

In addition to the creation of two new regulatory categories for traditional compounders and compounding manufacturers, (See Duane Morris' Alert on the earlier Senate Bill), the Revised Senate Bill adds new language concerning the use of compounds for office use, which imposes volume limitations and hefty criminal penalties. In sum, the Senate Bill is the most aggressive proposal to date for federal regulation of compounding pharmacies.

Essential Elements of the Revised Senate Bill

Compounded Drugs Are "New Drugs" Under the Federal Food, Drug, and Cosmetic Act (FFDCA)

The most significant change under the Revised Senate Bill, like its predecessor, is that the bill includes compounded drugs as a "new drug" under the FFDCA. This means that compounded drugs are presumptively subject to the FFDCA's registration, new drug, manufacturing practices and other requirements, unless an exemption applies.

Entities meeting the Revised Senate Bill's new definition of a traditional compounder would be exempt from the FFDCA requirements for Current Good Manufacturing Practices (CGMPs), adequate directions for use regulations and the new drug provisions.

Entities meeting the Revised Senate Bill's new definition of a compounding manufacturer would be exempt from the new drug and adequate directions for use regulations. Significantly, however, compounding manufacturers would be required to comply with the CGMPs and would not be exempt from the FFDCA's registration and inspection exemptions.

New Provisions in the Revised Senate Bill

In addition to this fundamental change to federal regulation of compounding pharmacies, the Revised Senate Bill adds several new provisions that would fundamentally alter the traditional state-based regulation of compounding pharmacies.

• Volume Limitations. The Revised Senate Bill imposes volume limitations. A traditional compounder can compound pursuant to a practitioner's order for office use, as long as no more than 10 percent of the drugs that it dispenses in a 30-day period are for such use. Although a compounded manufacturer does not have a volume limitation for compounding sterile drugs, a compounded manufacturer can compound only non-sterile drugs that appear on an FDA positive list. In establishing this list, the FDA is to consider whether "the non-sterile drug fulfills a clinical need that cannot be filled by a marketed drug."
• Link to Patient Names. The Revised Senate Bill requires a traditional compounder to receive from the physician the names of the patients to whom the compounded drugs are administered within 14 days of dispensing the compound.
• Criminal Penalties. With continuing focus on office use, the Revised Senate Bill makes it a crime for a traditional compounder to dispense a drug for office use that does not comply with the bill's requirements. It is also a crime to falsify the patient names that are required for the reconciliation process; however, the Revised Senate Bill creates a safe harbor allowing the pharmacy to dispense the drug in good faith and make a reasonable effort to obtain the names of the patients to whom the drug was administered.

Congressional Budget Office Report

On July 15, 2013, the Congressional Budget Office (CBO) issued a Cost Estimate Report of the Revised Senate Bill. The Cost Estimate Report detailed that implementing the Revised Senate Bill would have a net discretionary cost of $31 million over the 2014-2018 period, but may increase revenues from criminal and civil penalties collected. Establishment and inspection fees under the Revised Senate Bill are also expected to produce approximately $79 million over the 2015-2018 period.

Conclusion

The Revised Senate Bill is the latest congressional attempt to expand federal oversight over compounding pharmacies, and it differs in significant ways from its predecessor and its House counterpart. The Revised Senate Bill will likely still undergo many changes before it is adopted, if at all.

If you have any questions about this Alert or would like more information, please contact Rachael G. Pontikes, Elinor L. Hart, any of the attorneys in our Pharmaceutical, Medical Device, Pharmacy & Food group or the attorney in the firm with whom you are regularly in contact.

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