New bill mandates national requirements for drug compounding, distribution

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From international law firm Arnold & Porter LLP comes timely views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

On Nov. 18, after more than 1 year of debate sparked by a deadly 2012 meningitis outbreak tied to compounded injectable steroids, the Senate passed the bipartisan Drug Quality and Security Act (DQSA), which will now go to President Barack Obama for signature.

Daniel A. Kracov

Title I of the legislation — the Compounding Quality Act — will create a new two-tier system for drug compounding regulation. While the legislation would largely maintain the current state-focused framework for regulating traditional pharmacy compounding of prescriptions written for individual patients, it also will create a new category of “outsourcing facilities” that compound sterile drugs. Such facilities would be regulated in a manner closer to current FDA regulation of drug manufacturers, but without an approval requirement. They may not produce, however, drugs that:

have been withdrawn or removed from the market as unsafe or not effective,
are “essentially a copy of one or more approved drugs,”
are on a list developed by FDA of “drugs that present demonstrable difficulties for compounding that are reasonably likely to lead to an adverse effect on the safety or effectiveness of the drug or category of drugs, taking into account the risks and benefits to patients” unless compounding is done “in accordance with all applicable conditions identified on the list … as conditions that are necessary to prevent” such problems

Further, products produced by an outsourcing facility may be sold or transferred only by the facility that compounded the drug. Among other requirements, an outsourcing facility must register and list products with the FDA, pay annual fees, submit annual reports, and comply with FDA good manufacturing practice requirements and inspections.

The DQSA also addresses another long-simmering debate — the institution of a national drug distribution track-and-trace system. Title II, the Drug Supply Chain Security Act, would preempt state laws imposing such drug “pedigree” systems and give the FDA the authority to implement a uniform national system in the coming years, initially through the inclusion of a standardized numerical identifier and, with certain exceptions, exchange of transaction information and histories by drug manufacturers, wholesale distributors, dispensers, and repackagers.

The legislation also would establish a system of verification and notification when companies in the drug distribution chain suspect that a product is counterfeit or otherwise illegitimate. After 10 years, the legislation will mandate the development and implementation of an interoperable, electronic, package-level tracking system.

Overall, the DQSA will soon result in fundamental changes to both drug compounding regulation and the monitoring of manufactured drugs in commerce.

Daniel A. Kracov, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-5120; email: Daniel.Kracov@aporter.com