Memorandum of Understanding on Compounded Medications

Opinion: The FDA is in a Hole With MOU on Compounding Medications—It Should Stop Digging

June 21, 2022Scott Brunner, CAE

Congress expected the FDA to draft a memorandum of understanding on interstate distributions of compounded medications that states would be willing to sign, but that’s not what the agency did.

When FDA lawyers conceded in Federal Court in February that the agency had not properly followed Congress’ instructions for creating a memorandum of understanding (MOU) with states regarding interstate distributions of compounded medications, they finally seemed to be heeding Will Rogers’ advice: “If you find yourself in a hole, stop digging.”

For the FDA, that hole is now 25 years deep. Its impetus was a directive from Congress in 1997—part of revisions made to the Food, Drug & Cosmetic Act—that the agency execute an MOU under which state boards of pharmacy would report to the FDA certain information about state-licensed compounding pharmacies that distributed a large percentage of their compounded preparations across state lines.

As Congress conceived it, the MOU would be voluntary, but the law would impose restrictions on pharmacies shipping compounded drugs from states that chose not to sign it. Congress intended it to be a consensus document, created via the formal rule-making process, with input and endorsement of the states. In other words, Congress expected the FDA to draft an MOU that states would be willing to sign.

But that’s not what the agency did. Instead, it started digging. After several proposed iterations spanning 24 years, the FDA in 2020 finalized an MOU that:

• Did not go through formal notice-and-comment rulemaking.

• Failed to properly assess the economic impact on pharmacies and state boards of pharmacy.

• Conflated 2 important pharmacy law definitions: “distribute” and “dispense.”

That resulted in a lawsuit against the agency by 7 compounding pharmacies, whose arguments resonated in part with a federal judge and led to the FDA conceding its failures in court last February. Granted, the agency didn’t entirely abandon its shovel in that court appearance. Instead, it laid out plans for starting work on a new hole: proposing yet another version of the MOU, this time via the prescribed rule-making process it previously failed to follow.

But abandoning that MOU is precisely what the FDA ought to seek permission to do, because the specific problem the MOU was conceived in 1997 to address no longer exists.

To understand why the MOU as envisioned by Congress is out of date, let’s first return to those definitions mentioned earlier. Across federal and state pharmacy law, the terms “distribute” and “dispense” have remarkably consistent definitions.

“Dispensing” is patient-specific; it refers to a drug prepared for an individual patient pursuant to a prescription from a physician or other prescriber. “Distributions,” on the other hand, are not patient-specific; the term applies to batches of compounded medications prepared for in-clinic or in-hospital administration by a physician to a patient, and a prescription is not required.

Back in 1997 when Congress authorized creating the MOU, it was to address compounding and distribution by traditional compounding pharmacies of non-patient-specific medications intended for in-clinic administration. It was a practice generally allowed under most states’ laws at the time but was subsequently prohibited by Congress when it passed the Drug Quality & Security Act (DQSA) in 2013.

Under the DQSA, traditional compounders were forbidden from compounding drugs for in-clinic use without a prescription. Not only that, but a new category of compounding operation, called outsourcing facilities, was created. Those facilities would be allowed to distribute compounded medications to hospitals and clinics if they adhered to current good manufacturing practices, much like the manufacturers of FDA-approved drugs do.

The DQSA eliminated the need for that 1997 MOU because traditional compounders could no longer do what the MOU was envisioned to illuminate. Still, the requirement for an MOU remained in the Food, Drug & Cosmetic Act, so the FDA decided to dig a little deeper.

The agency re-drafted an MOU that applied to both distributions and dispensing of compounded medications—even though Congress had only authorized the MOU to cover distributions, and not patient-specific dispensing, regulation of which has long been the purview of state boards of pharmacy. That overreach led to the aforementioned lawsuit against the agency by compounding pharmacies and that February court appearance where the FDA climbed out of one hole and announced it would start another.

Here’s the thing, pharmacy compounders are not opposed to some level of reporting on shipments of compounded medications across state lines—even shipping of patient-specific compounded drugs. Because it’s not unusual in compounding that the pharmacy that makes that customized drug for your partner, your child, or your Aunt Sadie is in a different state, it’s not unreasonable for state boards of pharmacy and the FDA to want to know which pharmacies are shipping majorities of their compounded preparations out of state.

So instead of digging a new hole, the FDA should join with the compounding profession to change the law. Eliminate that out-of-date MOU requirement—an MOU that several states have already said they can’t sign (because of state law) or won’t sign (because of the administrative burden).

In its place create a statutory regime for reporting shipping info to state boards of pharmacy, to be shared with FDA. Maybe also create a narrow but permanent pathway in the statute for compounding pharmacies to mitigate drug supply chain problems by preparing urgent-use drugs in small batches for hospitals and clinics when those drugs are in national or regional shortage.

Stop digging FDA, and let’s start building a new framework that provides the reporting you want and maintains patient access to safe, life-enhancing compounded medications.

About the Author

Scott Brunner, CAE, is chief executive officer of the Alliance for Pharmacy Compounding.

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